Academy of Finance and Enterprise Business Department Gilberto by pengxiuhui

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									            Academy of Finance and Enterprise




                      Business Department
                     Gilberto Vega, Principal




                          Curriculum for
                         Accounting 1 (BA1)




                            September 2008




                                 Acknowledgements

Mike Angelaris, Deloitte & Touche

Adam Barber, Deloitte & Touche

Alan Berger, Assistant Principal Accounting, Murray Bergtraum High School.
Accounting 1 Curriculum                                                                                        Page 2 of 158



Daniel Bodzin, Science Teacher, Norman Thomas High School.

Patricia Bond, Business Teacher, Norman Thomas High School.

Vicente Blum, Social Studies Teacher, Norman Thomas High School.

Richard Capozzi, English and French Teacher, Norman Thomas High School.

Ying Chen, Student Technologist in Residence, Norman Thomas High School.

Dilenia Hernandez, English Teacher, Norman Thomas High School

Steve Jones, Information Technology Teacher, Norman Thomas High School.

Bill Pape, New York State CPA Society

Francis Perez, Student Technologist in Residence, Norman Thomas High School.

Carlos Salazar, Math Teacher, Norman Thomas High School.

Gilberto Vega, Assistant Principal, Business, Foreign Languages and the Arts, Norman
Thomas High School.




                                                    Table of Contents

Acknowledgement .................................................................................................................2

Table of Contents ...................................................................................................................3
Accounting 1 Curriculum                                                                                          Page 3 of 158

Introduction
       Overview ....................................................................................................................4
       Introductional Methodology ......................................................................................4
       Philosophy..................................................................................................................5
       Standards Being Address ...........................................................................................8

Unit 1: Introduction to Accounting
       Chapter 1:     You and the World of Accounting
       Chapter 2:     The World of Business and Accounting
       Chapter 3:     Business Transactions and the Accounting Equation
       Chapter 4:     Transactions that Affect Assets, Liabilities, and Owner’s Equity
       Chapter 5:     Transactions that Affect Revenue, Expenses, and Withdrawals
       Chapter 6:     Recording Transactions in a General Journal
       Chapter 7:     Posting Journal Entries to General Ledger Accounts
       Chapter 8:     The Six-Column Work Sheet
       Chapter 9:     Financial Statements for a Sole Proprietorship
       Chapter 10: Completing the Accounting Cycle for a Sole Proprietorship

Standards-Based Course Outline .........................................................................................9
Overview of Curriculum ....................................................................................................16
Weekly Calendar of Lessons .............................................................................................16
Standards
           ELA ............................................................................................................24
           Social Studies .............................................................................................26
           Math/Science/ Technology ........................................................................27
           CDOS .........................................................................................................28

Other Resources

Sample Lessons & Applications.........................................................................................29
Sample Rubrics ..................................................................................................................54
Recommended Teaching Techniques & Strategies ...........................................................57
Assessment Options ...........................................................................................................60
Appendix: Sample Examinations ......................................................................................61
Glossary ...........................................................................................................................139




                                                        Introduction

Overview:
Accounting 1 Curriculum                                                      Page 4 of 158

Accounting plays a vital role in the day-to-day activities of every business. In the first
unit, students will learn about career planning, the variety of career opportunities
available in accounting, and the importance of accounting in today’s business
environment. Accounting records and reports help business operate efficiently—and
profitably—by keeping track of how much is earned and how much is spent. Accounting
is so much a part of the business world that much of its terminology has become a part of
our everyday language. Throughout this course, you will learn why accounting has been
called the “language of business.”

       In the second unit, “The Basic Accounting Cycle,” students will learn how
business transactions affect the financial records of a business. Learning to analyze
business transactions correctly is the first step toward learning accounting. You will then
learn how to record those transactions in the accounting records of a the business. The
business used as an example in this unit is a sole proprietorship. The business, called
Roadrunner Delivery Service, provides delivery services to its customers. After studying
the chapters in this unit, you will have learned how to keep accounting records through a
complete accounting cycle.

Instructional Methodology:

Students learn by reading and learning terms and concepts presented in the required
textbook. They learn to use correct vocabulary by completing vocabulary and questions
at the end of each chapter entitled:
     Using Key Terms
     Understanding Accounting Concepts and Procedures

The following features help students learn and apply various accounting concepts and
procedures to the real business world:

              Unit Opener: Includes a short introduction and colorful topic photograph
               that sets the stage for what students are going to learn in the unit.
              Chapter Opener: Helps students organize the study of the chapter.
               Learning objectives let them preview what they will learn in the chapter.
               Special features like Workplace Connections provide an opportunity for
               them to apply their accounting knowledge.
              Check Your Understanding: These activities and problems provide
               immediate reinforcement and help students apply accounting concepts.
              Source Documents: Accompany each Business Transaction Analysis
               Model to help students visualize the forms used by real businesses.
              Business Transaction Analysis Models: help students not only learn how
               to record transactions, but also, help them think critically.
              Chapter Summary: Visually lists key concepts in the chapter for quick
               review and reference.
              Chapter Review and Activities: Help students review important
               accounting terms, concepts and procedures. Various activities offer them
               an opportunity to apply their critical thinking and decision-making skills.
Accounting 1 Curriculum                                                     Page 5 of 158


             Chapter Problems: Reinforce students’ accounting skills and enhance
              their accounting knowledge.
             Computerized Accounting: Help the students make the transition from a
              manual system to a computerized system. Also, they learn how to apply
              the chapter content through the management of Excel Spreadsheets.*

Philosophy:

      An emphasis on Accounting Careers through a presentation of career facts, skills
       needed on the workplace, and the types of business organizations that hire
       accountants. The following are featured:
           o Carrier Billing Manager
           o CPA
           o Business Consultant
           o Chief Accountant
           o Accounts Payable Manager
           o Partner
           o Controller
           o Tax Specialist
           o Credit Analyst
           o Software Developer
           o Division Director
           o Accounting Teacher
           o Controller
           o Accounts Payable Accounting Assistant
      The use of Internet Research to help students develop research, critical thinking,
       as well as, decision-making skills. The following are featured:
           o Finding Jobs on the Internet
           o The Small Business Administration
           o Careers: Salary Expectations
           o Currency Conversion
           o Certified Public Accounting
           o The Big Five
           o Peachtree Accounting Software
           o Preparing Financial Statements
           o Accounting Publications
           o Cash Control and Banking Activities
           o Payroll and Tax Records
           o The Internal Revenue Service
           o Becoming Part of an Organization
           o Fraud Detection
           o Bankcards
           o Electronic Commerce
           o Purchase versus Lease
           o Corporate Financial Statements
           o Financial Accounting Standards Board
           o Stocks Online
Accounting 1 Curriculum                                                       Page 6 of 158

          o   Online Banking
          o   Depreciating Assets
          o   Outsourcing Accounts Receivable
          o   Inventory Management
          o   Notes Payable: Car Loans
          o   Limited Liability Partnership
          o   Financial Statements for Partnerships

      The above touch upon a myriad of areas through an interdisciplinary approach.
       The following are addressed:
          o Art
          o Civics
          o Ecology
          o Economics
          o Education
          o English
          o Environment
          o Ethics
          o Foreign Language
          o Geography
          o Health
          o History
          o Law
          o Literature
          o Mathematics
          o Music
          o Science
          o Technology

      A close look at ethical issues that will guide students in their thinking and
       decision making processes. The following are discussed:
          o Padding A Resume
          o Becoming and Entrepreneur
          o Company Property
          o Software Piracy and Computer Viruses
          o Using the Company’s E-mail
          o The Workplace: Gossip, Sexual Harassment and Discrimination
          o Meeting a Deadline
          o Padding Expense Accounts
          o Financial Report or Repair
          o Pocketing Differences
          o Payroll Information
          o Money Shuffling
          o Confidentiality
          o Showing Favoritism
          o Working for a Competitor
          o Insufficient Funds
Accounting 1 Curriculum                                                   Page 7 of 158

          o   Out-of-Date Goods
          o   Reporting a Mistake
          o   Handling Sales Returns
          o   Using Insider Information
          o   Petty Cash Funds
          o   Who Will They Believe?
          o   Uncollectible Accounts
          o   Keeping Promotional Items
          o   Is the Boss Always Right?
          o   Partner Loyalty
          o   Using Another Person’s Idea
          o   Independence in the Accounting Profession*
          o   The Impact of Sarbanes-Oxley*

      Case Studies to help students make informed decisions through the application of
       critical thinking skills. The following are featured:
            o Career Advice
            o Entrepreneurship
            o Service Business: Health and Fitness
            o Service Business: Landscaping
            o Service Business: Web Site Design
            o Service Business: Exercise and Fitness
            o Service Business: Accounting Services
            o Service Business: Advertising Agency
            o Preparing Financial Statements
            o Service Business: Computer Consulting
            o Service Business: Entertainment
            o Payroll: Financial Planning
            o Payroll: Warehousing Center
            o Merchandising Business: Videotape
            o Merchandising Business: Sportswear Store
            o Merchandising Business: Movie Theater
            o Merchandising Business: Books & More
            o Merchandising Business: Training Videos
            o Merchandising Business: Gourmet Food Gifts
            o Merchandising Business: Department Store
            o Merchandising Business: Coffee Shop
            o Merchandising Business: Health Foods
            o Merchandising Business: Photography Studio
            o Merchandising Business: Formal Wear
            o Merchandising Business: Home Building and Supply
            o Merchandising Business: Restaurant/Retail Shop
            o Partnership: Dentists
            o Partnership: Building and Design

      A focus on business perspective by using examples from the business world to
       illustrate accounting concepts.
Accounting 1 Curriculum                                                       Page 8 of 158



Standards Being Addressed:

English Language Arts Standards
E1. Reading
E2. Writing
E3. Speaking, Listening, and Viewing
E4. Conventions, Grammar, and usage of the English Language
E5. Literature
E6. Public Documents
E7. Functional Documents
New York State ELA Standards
Standard 1: Students will read, write, listen and speak for information and understanding.
Standard 2: Students will read, write, listen and speak for literary response and expression.
Standard 3: Students will read, write, listen, and speak for critical analysis and evaluation.
Standard 4: Students will read, write, listen, and speak for social interaction.
Social Studies Standards
Standard 1:   History of the United States and New York
Standard 2:   World History
Standard 3:   Geography
Standard 4:   Economics
Standard 5:   Civics, Citizenship, and Government
New York State Career Development and Occupational Studies (CDOS)
Standards
Standard 1: Career Development
Standard 2: Integrated Learning
Standard 3a: Universal Foundation Skills
Standard 3b: Career Majors
     Accounting 1 Curriculum                                                  Page 9 of 158



                                        Course Outline

Lesson Topic                                    Content                     Standards Addressed
No.
1      Organization                             Delaney                     SS5
                                                cards, contracts, rules
                                                and regulations
2        Organization                           Delaney cards, contracts,   M7, SS5
                                                rules and regulations.
3        Organization                           Textbook distribution    M7, S2
4        Personal skills, values, and lifestyle Assess career vision     M7, CDOS1, SS4, SS5,
         goals                                                           E1c,E2a, E2b, E4a,
                                                                         E4b, T1, T2, T3, T7
5        Careers                                Personal interest tests, M2, CDOS1, S1, SS4,
                                                networking               SS5, E1c,E2a, E2b,
                                                                         E4a, E4b, T1, T2, T7

6        Careers in accounting               Print materials, internet, M2, CDOS1, S1, S6
                                             professional                SS4, SS5, E1c, E2a,
                                             organizations               E2b, E2c, E2d, E4a,
                                                                         E4b, E7a, T1, T2, T7
7        Setting career goals                Map out plan, education, M1, CDOS1, S2 SS4,
                                             on-the-job        training, E1c, E2a, E2b, E2c,
                                             internships                 E2d, E4a, E4b, E7a,
                                                                         E7b, T1, T2,
8        Organizations that hire accountants For-Profit and Not-for- M7,CDOS1, CDOS3B,
                                             Profit organizations        SS4, E1c,E2a, E2b,
                                                                         E4a, E4b, T1, T2,
9        Career opportunities in accounting  Accounting           Clerk, M6,CDOS1, CDOS3B,
                                             General       Bookkeeper, S2, SS4, E1c, E2a,E2b,
                                             Accountant,          CPA, E2c,E2d,E4a, E4b,E7a,
                                             Managerial Acctg, Not- T1, T2,
                                             for-Profit Acctg, and
                                             Teaching
10       Review                              Critical Thinking, Audit, S2, S6, S7 SS4, E2a,
                                             and Internet Connection E2e,E3c, E4a, E4b, T1,
                                             Activities                  T2, T3, T7
11       Exam                                All topics above
12       Risk-taking and the entrepreneur    Free enterprise system, M3, CDOS1, CDOS2,
                                             profit, loss                CDOS3A, S1, S7 SS4,
                                                                         SS5, E1c E2a, E2b,
                                                                         E4a,E4b, T1, T2,
13       Three types of profit businesses    Service, merchandising, M4,CDOS1, CDOS3B,
                                             and manufacturing           S7, , E1c E2a, E2b,
                                                                         E4a,E4b, T1, T2,
14       Three major forms of business Sole              proprietorship, M3,M4, CDOS1 SS4,
      Accounting 1 Curriculum                                                 Page 10 of 158


          organizations                         partnership                  SS5, E1c, E2a,.E2b,
15        Role of accounting                    Steps in accounting          M5,CDOS1, CDOS3B,
                                                system, business entity      S2, S6 SS4, E1c, E2a,
                                                growing concern, and         E2b, E2c, E2d, E4a,
                                                time period.                 E4b, T1, T2, T3,

16        Accounting Profession*           Conceptual framework,             M7, S1, S7, E1c, E5a,
                                           governing      bodies:            E6a, SS1, SS4, SS5
                                           FASB,         AICPA,
                                           SEC/PAOB.*
17*       Difference between financial and Financial          and            M7,CDOS1, CDOS3B,
          management accounting            management accounting             S1, SS4, , E2a, E2e,
                                                                             E3c, E4a, E4b, T1, T2,
                                                                             T3, T7
18*       Basic Assumptions                     Business          entity,    M4,CDOS1, CDOS3B,
                                                accounting period, going     SS4, E1a, E1c, E7a, T1,
                                                concern                      T2, T3, T7
19*       Ethics                                Becoming              an     M4, CDOS1, CDOS3B,
                                                entrepreneur                 SS4, SS5, E2c, E2e,
                                                                             E3b, E4a, E4b, T1, T2,
                                                                             T7
20*       Relationship between property and Property and financial           M3, CDOS1, CDOS2,
          financial claims                  claims                           CDOS3B, S1, SS3,
                                                                             SS4, E1c, E2a, E2b,
                                                                             E2c, E2d, E4a, E4b,
                                                                             E7a, T1, T2, T3, T7
21*       Meaning of equity                     Equity                       M3,CDOS1, CDOS3B,
                                                                             S1, SS4, E1c, E2a, E2b,
                                                                             E2c, E2d, E4a, E4b,
                                                                             E7a, T1, T2, T3, T7
22*       Accounting equation                   Assets, Liabilities and      M3,CDOS1, CDOS3B,
                                                Owner’s Equity               S1, SS4, SS5, E2a, E2e,
                                                                             E3c, E4a, E4b, T1, T2,
                                                                             T3, T7
23*       Business transactions                 Business     transactions,   M4, CDOS1, CDOS2,
                                                account, Acc. Rec, Acc.      CDOS3A, S1, SS4,
                                                Pay., Capital                SS5, E1c, E2a, E2d,
                                                                             E2e, E3c, E4a, E4b,
                                                                             E5a, T1, T2, T3, T7
24*       Elements of the accounting equation   Assets, Liabilities and      M3, CDOS1, CDOS2,
                                                Capital                      CDOS3A, S1, S2, E2a,
                                                                             E2e, E3c, E4a, E4b, T1,
                                                                             T2, T3, T7
      Accounting 1 Curriculum                                                  Page 11 of 158


25*       Effect of transactions       on      the Investments     by     the M3,M4,          CDOS1,
          accounting equation                      owner, cash payment CDOS2,               CDOS3A,
                                                   and credit transactions     SS4, SS5, E1c,E2a,
                                                                               E2d, E2e, E3c, E4a,
                                                                               E4b,E5a, T1, T2, T3,
                                                                               T7
26-27     Effect of revenue and expense Revenue, expenses, and M3,M5,CDOS1,
          transactions on owner’s equity           withdrawals by owner        CDOS2, CDOS3A, S1,
                                                                               S2, SS4, E2a, E2e, E3c,
                                                                               E4a, E4b, T1, T2, T3,
                                                                               T7
28        Exploring Accounting Spreadsheets        Introduction            to M2,CDOS1,CDOS2,
                                                   Microsoft Excel             CDOS3A, S2, S6, E2a,
                                                                               E2e, E3c, E4a, E4b, T1,
                                                                               T2, T3, T7
29-30     Review                                   Critical        Thinking, S2, S6, S7, SS4, SS5,
                                                   Computerized                E1c, E2a, E2b, E2c,
                                                   Accounting, Audit, and E2d, E2e, E3c E4a,
                                                   Internet       Connection E4b, E5a,E7a, T1, T2,
                                                   Activities                  T3, T7
31        Exam                                     All of the above chapter
                                                   topics
32        Rules of debit and credit                Double-entry acctg, T M3, CDOS1, CDOS2,
                                                   accounts, rules of debit CDOS3A, S2, SS4,
                                                   and credit                  E1c, E3c, E4a, E5a,
                                                                               E6a,E7a, T1, T2, T3,
                                                                               T7
33        Rules of debit and credit for assets     Assets,          increase, M4, CDOS1, CDOS2,
                                                   decrease, balance side      CDOS3A, S1, SS4,
                                                                               E1c, E2d, E3c, E4a,
                                                                               E5a, E6a,E7a, T1, T2,
                                                                               T3, T7
34        Rules of debit and credit for Liability,                    capital, M4, CDOS1, CDOS2,
          liabilities and owner’s equity increase,                  decrease, CDOS3A,             SS4,
          accounts                                 balance side.               E1c,E3c, E4a, E4b,
                                                                               E5a,E6a,E7a,E7b, T1,
                                                                               T2, T3, T7
35        Applying the rules of debit and credit Review              through M4, CDOS1, CDOS2,
                                                   application problems        CDOS3A, S7, SS4,
                                                                               E1c, E2d, E3c, E4a,
                                                                               E5a, E6a,E7a, E7b, T1,
                                                                               T2, T3, T7
36        Accounting Equation Review*              How T Accounts, Debits S1, S7, M1, M3, M7
                                                   and Credits fit into the E1c, E5a, E6a, SS1,
                                                   Accounting Equation.*       SS4, SS5
     Accounting 1 Curriculum                                               Page 12 of 158


37-38    Review                               Critical      thinking,   M2,M4,CDOS1,
                                              Computerized              CDOS2, CDOS3A, S2,
                                              Accounting, Audit and     S6, S7, SS3, SS4, E2a,
                                              Internet    Connection    E2e, E3c, E4a, E4b,
                                              Activities                T1, T2, T3, T7
39       Ethics                               Software Piracy and       M2, CDOS1, CDOS2,
                                              Computer Viruses*         CDOS3A, S2, SS3,
                                                                        SS5, E2a, E2e, E3c,
                                                                        E4a, E4b, T1, T2, T3,
                                                                        T7
40       Exam                                  Chapter topics
41       Difference between temporary and Revenue,            expense, M4, CDOS1, CDOS2,
         permanent accounts                    withdrawals          vs. CDOS3A, S1, SS4,
                                               permanent accounts       E2a, E3c, E3e,E4a,
                                                                        E4b,E7a, T1, T2, T3,
                                                                        T7
42       Analysis of transactions affecting Rules of debit and credit M3,CDOS2, CDOS3A,
         revenue, expense and withdrawals                               SS3, SS5, E1c, E3c,
                                                                        E4a, E5a, E6a, E7a, T1,
                                                                        T2, T3, T7
43       Review of Accounting Equation*        How the T accounts, M1, M3, M7, S1, S2,
                                               Debits and Credits fit S7, E1c, E5a, E6a, SS4
                                               into the Accounting
                                               Equation.*
44       Auditing records                      Finding errors           M3,            CDOS2,
                                                                        CDOS3A, E1c, E3c,
                                                                        E4b, E5a, E6a, E7a,
                                                                        E7b, T1, T2, T3, T7
45       Review                                Critical       thinking, M1,CDOS2, CDOS3A,
                                               computerized             S1, E1c,E2c, E3c, E4a,
                                               accounting, audit, and E4b, E5a, E6a, E7a,
                                               Internet     Connection E7b, T1, T2, T3, T7
                                               Activities
46       Ethics                                Using the Company’s M2, S2, S7, M2, E1c,
                                               Email*                   E2f, E4b, E5a, E6a,
                                                                        SS1, SS4
47       Accounting cycle                      Overview of accounting M2,M3,M4, CDOS2,
                                               cycle                    CDOS3A, S1, SS4,
                                                                        E1c, E2a, E2d, E4a,
                                                                        E7b, T1, T2, T3, T7
48       First three steps in accounting cycle Collecting and verifying M2,M3,M4, CDOS2,
                                               source       documents, CDOS3A, S1, SS4,
                                               analyzing       business E1c, E2a, E2c, E3b,
                                               transactions, recording E3c, E4a, E5a, E5b,
                                               business transactions in E7a, E7b, T1, T2, T3,
                                               a Journal                T7
     Accounting 1 Curriculum                                                 Page 13 of 158


49-50    Journalizing business transactions     Recording transactions M2,M3,CDOS2,
                                                on a General Journal      CDOS3A, S1, S2, S7,
                                                                          SS4, E2a, E3c, E3e,
                                                                          E4a, E4b, E7a, T1,
                                                                          T2,T7,
51       Correcting errors on journal entries   Analysis of transactions M5,             CDOS2,
                                                                          CDOS3A, SS4, E1c,
                                                                          E2a, E2d, E3b, E4a,
                                                                          E4b, E5b, E7a, E7b,
                                                                          T1, T2, T3,
52       Review                                 Critical        thinking, M2,CDOS2, CDOS3A,
                                                computerized              CDOS3B, S2M S7,
                                                accounting, audit, and SS4, E2d, E3c, E6a,
                                                Internet      Connection E6b, E7a, E7b, T1, T2,
                                                Activities                T3, T7
53       Ethics*                                The           Workplace: M2, CDOS1, SS4, E2a,
                                                Gossip,           Sexual E2e, E3c,E4a, E4b, T1,
                                                Harassment            and T2, T7
                                                Discrimination.*
54       Exam                                   Chapter topics
55       Chart of accounts                      Ordering              and M3 CDOS2, CDOS3A,
                                                Numbering accounts        S1, S2, SS4, E2a,
                                                                          E3c,E3e,E4a,E4b, E7a,
                                                                          T1, T2, T3, T7
56       Opening general ledger accounts        Ledger account, four- M3, CDOS2,
                                                column ledger             CDOS3A, E1c, E2a,
                                                                          E2d, E3b, E4a, E4b,
                                                                          E5b, E7a, E7b, T1, T2,


57       Posting process                        Post    from     General M4,CDOS2, CDOS3A,
                                                Journal    to     General S2, SS4, E1c,E3c, E4a,
                                                Ledger                     E4b, E5a, E6a, E7a,
                                                                           E7b, T1, T2, T3, T7
58       Proving the equality of the ledger     Define trial balance, M2,CDOS2, CDOS3A,
                                                prove debits and credits, S1, SS4, E1c,E3c, E4a,
                                                find and correct errors.   E4b, E5a, E6a, E7a,
                                                                           E7b, T1, T2, T3, T7
59       Fifth step of the accounting cycle     Trial Balance              M3,CDOS2, CDOS3A,
                                                                           S1, SS4, T1, T2, T3,
                                                                           T7
60       Correcting entries                     Transposition,      slide, M1,CDOS2, CDOS3A,
                                                omission, incorrect debit S1, S2, SS4, , E1c, E3c,
                                                or    credit,   addition, E4a, E4b, E5a, E6a,
                                                subtraction errors         E7a, E7b, T1, T2, T3,
                                                                           T7
     Accounting 1 Curriculum                                                    Page 14 of 158


61       Review                                   Critical       thinking,   M5,CDOS2, CDOS3A,
                                                  computerized               S2, S6, S7, SS3, SS5, ,
                                                  accounting, audit, and     E2a,E2e, E3c, E4a,
                                                  Internet    Connection     E4b, T1, T2, T3, T7
                                                  Activities
62       Ethics                                   Meeting deadlines          M2, CDOS1, CDOS2,
                                                                             CDOS3A,       E2a,E2e,
                                                                             E3c, E4a, E4b, T1, T2,
                                                                             T3, T7
63       Sixth step in the accounting cycle       Worksheet                  M2 CDOS2, CDOS3A,
                                                                             S1, S2, E2a,E3c, E3e,
                                                                             E4a, E4b,E7a, T1, T2,
                                                                             T3, T7
64       Trial balance      section   of      the Ruling and totaling the    M3,CDOS2, CDOS3A,
         worksheet                                trial balance              S1, S2, SS4, SS5,
                                                                             E1c,E2a, E2d, E3b,
                                                                             E4a, E4b, E5b, E7a,
                                                                             E7b, T1, T2, T3, T7
65       Income Statement and Balance Worksheet     temporary                M1,M2,M3,CDOS2,
         Sheet sections of worksheet  and permanent accounts,                CDOS3A, S1, S2, SS4,
                                      net         income/loss,               E1c,E3c, E4a, E4b,
                                      matching principle.                    E5a, E6a, E7a,E7b, T1,
                                                                             T2, T3, T7
66       Review                                   Critical        thinking,  E2a, E2e, E3c,.E4a,
                                                  computerized               E4b, T1, T2, T3, T7
                                                  accounting, audit, and
                                                  Internet     Connection
                                                  Activities
67       Ethics                                   Padding          expense M2, CDOS1, CDOS2,
                                                  accounts                  CDOS3A, SS3, SS4,
                                                                            E1c, E3c, E4a, E4b,
                                                                            E5a, E6a, E7a, T1, T2,
                                                                            T7
68       Exam                                     Chapter topics
69       Seventh step in the accounting cycle     Financial    statements: M2,CDOS2, CDOS3A,
                                                  Income        Statement, S1, S2, SS4, E1c,E3c,
                                                  Statement of Changes in E4a, E4b, E5a, E6a,
                                                  Owner’s           Equity, E7a, T1, T2, T3, T7
                                                  Balance Sheet
70       Income Statement                         Worksheet                 M1,CDOS2, CDOS3A,
                                                                            S1, S2, SS4, , E1c, E2a,
                                                                            E4a, E4b, E5b, E6a,
                                                                            E6b, T1, T2, T3, T7
     Accounting 1 Curriculum                                               Page 15 of 158


71       Statement of Changes in Owner’s Worksheet                       M1,CDOS2, CDOS3A,
         Equity                                                          S1, S2, E1c, E2a, E4a,
                                                                         E4b, E5b, E6a, E6b,
                                                                         T1, T2, T7
72       Balance Sheet                       Worksheet,           report M1,CDOS2, CDOS3A,
                                             format                      S1, S2, SS3, SS4, ,
                                                                         E1c, E2a, E4a, E4b,
                                                                         E5a, E6a, E6b,
73       Review                              Critical         thinking, S2 SS3, SS4, , E1c,
                                             computerized                E3c, E4a, E4b, E5a,
                                             accounting, audit, and E6a, E7a, E7b,
                                             Internet       Connection
                                             Activities
74       Closing Process                     Temporary           capital M5, CDOS1 ,CDOS2,
                                             accounts                    CDOS3A, S1, SS4,
                                                                         E1c,E2a, E4a, E4b,
                                                                         E5b, E6a, E6b, T1, T2,
                                                                         T3, T7
75       Journalizing closing entries        Purpose of Income M1,M2,CDOS2,
                                             Summary           account, CDOS3A, S1, S2, SS4,
                                             closing revenue and E1c,E2a, E4a, E4b,
                                             expense accounts            E5b, E6a, E6b, T1, T2,
                                                                         T3, T7
76       Relationship     between     Income Closing            Income M1, CDOS2, DOS3A,
         Summary and Capital accounts        Summary                and S1, SS4, E1c,E2a, E4a,
                                             Withdrawals         against E4b, E5b, E6a, E6b,
                                             Capital                     T1, T2, T7
77       Posting closing entries to the Posting process. Post- M1,M2,M3,CDOS2,
         General Ledger                      closing trial balance.      CDOS3A, SS4, E1c,
                                                                         E3c, E4a, E4b, E5a,
                                                                         E6a, E7a, E7b,
78-79    Review                              Critical         thinking, S2, S6, S7, SS3, SS4,
                                             computerized                E2a, E2e, E3c, E4a,
                                             accounting, audit, and E4b, T1, T2, T3, T7
                                             Internet       Connection
                                             Activities
80       Test                                Final exam
Accounting 1 Curriculum                                                     Page 16 of 158


              Norman Thomas High School for Commercial Education
                              Steve Satin, Principal
              Department of Business, Foreign Languages and the Arts
                       Gilberto Vega, Assistant Principal

                                   Accounting 1 (BA1)

                                   Calendar of Lessons

Textbook: Glencoe Accounting: Real-World Applications & Connections, First Year
Course. Guerrieri, Haber, Hoyt, and Turner. Third and Fourth Editions.

Course Overview:

        Accounting plays a vital role in the day-to-day activities of every business. In the
first unit, students will learn about career planning, the variety of career opportunities
available in accounting, and the importance of accounting in today’s business
environment. Accounting records and reports help business operate efficiently—and
profitably—by keeping track of how much is earned and how much is spent. Accounting
is so much a part of the business world that much of its terminology has become a part of
our everyday language. Throughout this course, you will learn why accounting has been
called the “language of business.”

       In the second unit, “The Basic Accounting Cycle,” students will learn how
business transactions affect the financial records of a business. Learning to analyze
business transactions correctly is the first step toward learning accounting. You will then
learn how to record those transactions in the accounting records of a the business. The
business used as an example in this unit is a sole proprietorship. The business, called
Roadrunner Delivery Service, provides delivery services to its customers. After studying
the chapters in this unit, you will have learned how to keep accounting records through a
complete accounting cycle.

Week 1

Lesson 1: Organization:
    Distribute delaney cards and contracts.
    Discuss class regulations and grading criteria.

Lesson 2: Organization:
    Continue distributing delaney cards and contracts.
    Discuss handout:
          o Popular expressions
          o The kind of person you don’t aspire to be.
          o What makes teacher unfair or good.
          o Computing the grade average for two typical students.

Lesson 3: Organization:
Accounting 1 Curriculum                                                    Page 17 of 158


       Distribute textbooks.
       Explain importance of bringing the textbook to class daily.
       Become familiar with textbook organization
               o Presentation of material
               o Sample problems and illustrations
               o Review questions
               o Exercises
               o Vocabulary
               o Projects and supplementary problems

Unit 1: Introduction to Accounting
Chapter 1: You and the World of Accounting

Lesson 4:      Aim: How do personal skills, values, and lifestyle goals affect career
               decisions?
               Content: Assess career vision: skills, values, lifestyle, personality.

Lesson 5:      Aim: How do we find information about a variety of careers?
               Content: Personal interest tests, networking.

Week 2

Lesson 6:      Aim: How do we find specific information regarding careers in
               accounting?
               Content: Print materials, internet, professional organizations.

Lesson 7:      Aim: How do we set career goals?
               Content: Map out plan, education, on-the-job training, internships.

Lesson 8:      Aim: What are the types of businesses and organizations that hire
               accountants?
1              Content: For-Profit and Not-for-profit organizations.

Lesson 9:      Aim: What career opportunities are available in accounting?
               Content: Accounting clerk, General Bookkeeper, Accountant, CPA,
               Managerial Accounting, Not-for-Profit Accounting, and Teaching.

Lesson 10:     Review: Critical Thinking, Audit, and Internet Connection Activities

Week 3

Lesson 11      Exam



Chapter 2: The World of Business and Accounting
Accounting 1 Curriculum                                                  Page 18 of 158

Lesson 12    Aim: What is the role, risk-taking, and the entrepreneur in the U.S.
             economy?
             Content: Free enterprise system, profit, loss.

Lesson 13    Aim: What are the three types of business operated to earn a profit in our
             private enterprise economy?
             Content: Service business, merchandising business, and manufacturing
             business.

Lesson 14    Aim: What are the three major forms of business organizations in our
             private enterprise economy?
             Content: Sole proprietorship, partnership and corporation.

Lesson 15    Aim: What is the role of accounting in our private enterprise economy?
             Content: Steps in an accounting system, business entity growing concern,
             and time period.

Lesson 16:   Aim: What is the conceptual framework of the Accounting profession?
             What are some of the governing bodies of the Accounting field?
             Content: Conceptual framework, FASB, AICPA, SEC, PAOB.*

Week 4

Lesson 17:   Aim: What is the difference between financial and management
             accounting?
             Content: Financial accounting, management accounting.

Lesson 18:   Aim: What are the three basic assumptions that underlie accounting
             principles?
             Content: Business entity, accounting period, going concern.

Lesson 19:   Aim: A matter of ethics: Becoming an entrepreneur.
             Content: Case study

Unit 2: The Basic Accounting Cycle

Chapter 3    Business Transactions and the Accounting Equation

Lesson 20    Aim: What is the relationship between property and financial claims?
             Content: Define and discuss property and claims.

Lesson 21:   Aim: What is the meaning of equity as it is used in accounting?
             Content: Equity.
Week 5

Lesson 22:   Aim: What is the accounting equation?
             Content: Assets, liabilities, and owner’s equity.
Accounting 1 Curriculum                                                  Page 19 of 158



Lesson 23:   Aim: What is a business transaction?
             Content: Business transaction, Account, Accounts Receivable, Accounts
             Payable, and Capital.

Lesson 24:   Aim: How do we identify the elements of the accounting equation?
             Content: Assets, liabilities and capital.

Lesson 25:   Aim: What is the effect of business transactions on the accounting
             equation?
             Content: Investments by the owner, cash payment transactions and credit
             transactions.

Week 6

Lessons      Aim: What is the effect of the revenue and expense transactions on
             owner’s equity?
26-27        Content: Revenue and expense accounts, withdrawals by the owner.

Lesson 28:   Aim: Exploring Accounting Spreadsheets
             Content: Introduction to Microsoft Excel.

Lessons :    Aim: Review: Critical Thinking, Computerized Accounting, Audit, and
29-30        Internet Connection Activities

Week 7

Lesson 31:   Aim: Exam


   Chapter 4:   Transactions that Affect Assets, Liabilities, and Owner’s Equity

Lesson 32:   Aim: What are the rules of debit and credit?
             Content: Double-entry accounting, T accounts, rules of debit and credit.

Lesson 33:   Aim: What are the rules of debit and credit for assets?
             Content: Assets increase side, balance side, and decrease side.


Lesson 34:   Aim: What are the rules of debit and credit for liability and owner’s
             equity accounts?
             Content: Liability and capital accounts are increased by credits and
             liability and capital decreased by debits.

Lesson 35:   Aim: How do we apply the rules of debit and credit?
             Content: Review of rules of debit and credit
Accounting 1 Curriculum                                                 Page 20 of 158

Lesson 36     Aim: Review of Accounting Equation.
              Content: How the T accounts, debits and credits fit into the Accounting
              Equation.*

Week 8

Lessons:      Review: Critical Thinking, Computerized Accounting, Audit, and Internet
37-38         Connection Activities.

Lesson 39:    Aim: A Matter of Ethics
              Content: Case: Software Piracy and Computer Viruses*

Lesson 40:    EXAM

Week 9

Chapter 5:    Analyzing Transactions Affecting Revenue, Expense, and
              Withdrawals

Lesson 41:    Aim: What is the difference between permanent accounts and temporary
              capital accounts?
              Content: Revenue, expense, withdrawals vs. permanent accounts.

Lessons 42:   Aim: How do we analyze transactions affecting revenue, expense and
              withdrawals?
              Content: Rules of debit and credit for revenue, expense and withdrawal
              accounts.

Lesson 43:    Aim: Review of Accounting Equation.
              Content: How the T accounts, debits and credit fit into the Accounting
              Equation?*

Lesson 44:    Aim: How do we conduct an audit of records?
              Content: Finding errors and making corrections.

Lesson 45:    Review: Critical Thinking, Computerized Accounting, Audit, and Internet
              Connection Activities.

Week 10

Lesson 46:    Aim: A Matter of Ethics
              Content: Case of study: Using the company’s email.*

Chapter 6:    Recording Transactions in a General Journal

Lesson 47:    Aim: What is the accounting cycle?
              Content: Overview of Accounting Cycle, Steps 1 to 9
Accounting 1 Curriculum                                                  Page 21 of 158



Lesson 48:   Aim: What are the first three steps in the accounting cycle?
             Content: Collecting and verifying source documents, analyzing business
             transactions, recording business transactions in a Journal.

Lessons:     Aim: How do we journalize business transactions?
49-50        Content: Recording transactions on a General Journal.

Week 11

Lesson 51:   Aim: How do we correct errors on journal entries?
             Content: Analysis of transactions recorded incorrectly.

Lesson 52:   Aim: Review: Critical Thinking, Audit, and Internet Connection
             Activities

Lesson 53:   Aim: A Matter of Ethics: The Workplace: Gossip, Sexual Harassment
             and Discrimination.*

Lesson 54:   Aim: Exam

Chapter 7:   Posting Journal Entries to General Ledger Accounts

Lesson 55:   Aim: What is the use of the chart of accounts?
             Content: The order and numbering of accounts.

Week 12

Lesson 56:   Aim: How do we open general ledger accounts?
             Content: Define ledger, account. Illustrate format of a four-column
             ledger.

Lesson 57:   Aim: How do we post from the General Journal to the General Ledger?
             Content: Illustrate posting process.



Lesson 58:   Aim: How do we prove the equality of the ledger?
             Content: Define Trial balance, prove debits and credits, find and correct
             errors.

Lesson 59:   Aim: What is the fifth step of the accounting cycle?
             Content: Trial Balance.

Lesson 60:   Aim: What are correcting entries?
Accounting 1 Curriculum                                                Page 22 of 158

             Content: Correction of entries on General Journal. Transposition error,
             slide, omissions, incorrect debiting or crediting, addition/subtraction
             errors.

Week 13

Lesson 61:   Review: Critical Thinking, Audit, Computerized Accounting, and Internet
             Connection Activities

Lesson 62:   Aim: A Matter of Ethics
             Case of Study: Meeting Deadlines

Chapter 8: The Six-Column Work Sheet

Lesson 63:   Aim: What is the sixth step in the accounting cycle?
             Content: Worksheet.

Lesson 64:   Aim: How do we prepare the trial balance section of a worksheet?
             Content: Ruling and totaling the trial balance.



Lesson 65:   Aim: How do we prepare the income statement and balance sheet sections
             of the Worksheet?
             Content: Worksheet temporary and permanent accounts. Show net
             income/net loss. Matching principle.

Week 14

Lesson 66:   Review: Critical Thinking, Audit, and Internet Connection Activities

Lesson 67:   Aim: A Matter of Ethics
             Content: Padding Expense Accounts

Lesson 68:   Aim: EXAM



Chapter 9: Preparing Financial Statements for a Sole Proprietorship

Lesson 69:   Aim: What is the seventh step in the accounting cycle?
             Content: Preparing financial statements: Income Statement, Statement of
             Changes in Owner’s Equity, Balance Sheet.

Lesson 70:   Aim: How do we prepare the income statement?
             Content: Worksheet.
Accounting 1 Curriculum                                                Page 23 of 158


Week 15

Lesson 71:   Aim: How do we prepare the statement of changes in owner’s equity?
             Content: Worksheet.

Lesson 72:   Aim: How do we prepare the balance sheet?
             Content: Worksheet. Report form format.

Lesson 73:   Review: Critical Thinking, Audit, and Internet Connection Activities

Chapter 10: Completing the Accounting Cycle for a Sole Proprietorship

Lesson 74:   Aim: Why are temporary capital accounts closed at the end of the fiscal
             period?
             Content: The Closing Process.

Lessons:     Aim: How do we journalize closing entries?
75           Content: Purpose of Income Summary account. Closing Revenue and
             Expense accounts.

Week 16

Lesson 76:   Aim: What is the relationship between the Income Summary and Capital
             accounts?
              Content: Closing the Income Summary and Withdrawals accounts
             against capital.

Lesson 77:   Aim: How do we post the closing entries to the General Ledger?
             Content: Illustrate and explain the posting process. Prepare Post-Closing
             Trial Balance.

Lessons :    Review: Critical Thinking, Audit, Computerized Accounting and Internet
78-79        Connection Activities

Lessons:     Aim: Exam
80-82
Accounting 1 Curriculum                                                      Page 24 of 158


                                     Standards
Following the Overview of Curriculum, a complete list of the CDOS and content area
standards should be included to allow the reader to easily identify the learning objectives
identified in the standards column.

                    English Language Arts Standards
E1. Reading
       E1a. Read 25 books of quality and complexity illustrated in the sample reading
list.
       E1b. Read and comprehend at least 4 books on the same subject, or by the same
author or in the same genre.
       E1c. Read and comprehend; informational material.

E2. Writing
      E2a.    Produce a report of information.
      E2b.    Produce a response to literature.
      E2c.    Produce a narrative account (fictional or autobiographical).
      E2d.    Produce a narrative procedure.
      E2e.    Produce a reflective essay.

E3. Speaking, Listening, and Viewing
      E3a. Participate in one-to-one conferences with the teachers.
      E3b. Participate in group meetings.
      E3c. Prepare and deliver an individual presentation.
      E3d. Make informed judgments about TV, radio, and film.
      E3e. Listen to and analyze a public speaking performance.

E4. Conventions, Grammar, and usage of the English Language
      E4a. Independently and habitually demonstrate an understanding of all the rules of
      the English language in written and oral work.
      E4b. Analyze and subsequently revise work to improve its clarity and effectiveness.

E5. Literature
      E5a. Respond to non-fiction, fiction, poetry, and drama using interpretive and critical
      processes.
      E5b. Produce work in at least on genre that follows the conventions of the genre.

E6. Public Documents
     E6a. Critique public documents with an eye to strategies common in public discourse.
     E6b. Produce public documents.

E7. Functional Documents
     E7a. Critique functional documents.
     E7b. Produce functional documents appropriate to audience and purpose.
Accounting 1 Curriculum                                                    Page 25 of 158


                          New York State ELA Standards
Standard 1: Students will read, write, listen and speak for information and understanding.
As listeners and readers, students will collect data, facts, and ideas; discover relationships,
concepts, and generalizations; and use knowledge generated from oral, written, and
electronically produced texts. As speakers and writers, they will use oral and written language to
acquire, interpret, apply, and transmit information.

Standard 2: Students will read, write, listen and speak for literary response and expression.
Students will read and listen to oral, written, and electronically produced texts and performances,
relate texts and performances to their own lives, and develop and understanding of the diverse
social, historical, and cultural dimensions the texts and performances represent. As speakers and
writers, students will use oral and written language for self-expression and artistic creation.

Standard 3: Students will read, write, listen, and speak for critical analysis and evaluation.
As listeners and readers, students will analyze experiences, ideas, information, and issues
presented by others using a variety of established criteria. As speakers and writers, they will
present, in oral and written language and from a variety of perspectives, their opinions and
judgments on experiences, ideas, information and issues.

Standard 4: Students will read, write, listen, and speak for social interaction.
Students will use oral and written language for effective social communication with wide variety
of people. As readers and listeners, they will use the social communications of others to enrich
their understanding of people and their views.
Accounting 1 Curriculum                                                  Page 26 of 158




                       Social Studies Standards
Standard 1: History of the United States and New York
             Students will use a variety of intellectual skills to demonstrate their
             understanding of major ideas, eras, themes, developments, and turning
             points in the history of the United States and New York.
Standard 2: World History
             Students will use a variety of intellectual skills to demonstrate their
             understanding of major ideas, eras, themes, developments, and turning
             points in world history and examine the broad sweep of history from a
             variety of perspectives.
Standard 3: Geography
             Students will use a variety of intellectual skills to demonstrate their
             understanding of the geography of the interdependent world in which we
             live—local, national, and global—including the distribution of people,
             places, and environments over the Earth’s surface.
Standard 4: Economics
             Students will use a variety of intellectual skills to demonstrate their
             understanding of how the United States and other societies develop
             economic systems and associated institutions to allocate scarce resources,
             how major decision-making units function in the United States and other
             national economies, and how an economy solves the scarcity problem
             through market and nonmarket mechanisms.
Standard 5: Civics, Citizenship, and Government
             Students will use a variety of intellectual skills to demonstrate their
             understanding of the necessity for establishing governments; the
             governmental system of the United States and other nations; the United
             States Constitution; the basic civic values of American constitutional
             democracy; and the roles, rights, and responsibilities of citizenship,
             including avenues of participation.
Accounting 1 Curriculum                                                   Page 27 of 158



           New York State Math/Science/Technology Standards
Standard 1: Students will use mathematical analysis, scientific inquiry, and engineering design,
as appropriate, to pose questions, seek answers, and develop solutions.

Standard 2: Students will access, generate, process, and transfer information using appropriate
technologies.

Standard 3: Students will understand mathematics and become mathematically confident by
communicating and reasoning mathematically, by applying mathematics in real-world settings,
and by solving problems through the integrated study of numbers systems, geometry, algebra,
data, analysis, probability, and trigonometry.

Standard 4 : Students will understand and apply scientific concepts, principles, and theories
pertaining to the physical setting and living environment and recognize the historical
development of ideas in science.

Standard 5: Students will apply technological knowledge and skills to design, construct, use,
and evaluate products and systems to satisfy human and environmental needs.

Standard 6: Students will understand the relationships and common themes that connect
mathematics, science, and technology and apply the themes to these and other areas of learning.

Standard 7: Students will apply the knowledge and thinking skills of mathematics, science, and
technology to address real-life problems and make informed decisions.
Accounting 1 Curriculum                                                   Page 28 of 158



               Career Development and Occupational Studies
Standard 1: Career Development
Students will be knowledgeable about the world of work, explore career options, and
relate personal skills, aptitudes, and abilities to future career decisions.

Standard 2: Integrated Learning
Students will demonstrate how academic knowledge and skills are applied in the
workplace and other settings.

Standard 3a: Universal Foundation Skills
Students will demonstrate mastery of the foundation skills and competencies essential for
success in the workplace.

Standard 3b: Career Majors
Students who choose a career major will acquire the career-specific technical
knowledge/skills necessary to progress toward gainful employment, career advancement,
and success in postsecondary programs.
Accounting 1 Curriculum                                                   Page 29 of 158


                                  Sample Lessons
                                Chapter 3 Lesson Plan
Topic:                Business Transactions and the Accounting Equation

Objectives:           Students will be able to:
                      1. Define property and property rights.
                      2. Understand the relationship between property and property
                         rights.
                      3. Explain that the right to own property is fundamental to our
                         private enterprise system.
                      4. Define equity in an accounting context.
                      5. Differentiate between assets and liabilities.
                      6. Define the basic accounting equation.
                      7. Understand how assets, liabilities and owner’s equity are all
                         part of the basic accounting equation.

Materials:            Text, Glencoe Accounting: First-Year Course, pp. 18-21.

Do Now:               1. Do your parents own a home? If not, do you have any friends
                         or family members who do?
                      2. Do you own any of the following: rollerblades, stereo
                         equipment, clothing?

Motivation:           1. What do you call a house that is owned? (Property, Real
                         Property, Assets)
                      2. What do you call the items that you own (clothing, stereo
                      equipment)? (Personal Property, Assets)
                      3. Do businesses own property as well, real or personal? (Yes.)
                      4. How can we express the relationship between property and the
                         rights or claims to that property? (Today we will learn the basic
                         accounting equation, accounting’s foundation.)

Aim:                  How do we define equity?

Development:
1. Property and Property Rights
Property:            Anything of value owned or controlled by owner
Real Property:       Real estate, homes
Personal Property:   Clothing, etc.
Credit:              When you buy property and agree to pay for it later
Creditor:            The business or person selling you the property on credit

                      For instance, if you purchased a walkman for $100 cash, then the
                      property (cost) is $100, and your property rights (or financial
                      claims/your claim to the walkman) is $100.
Accounting 1 Curriculum                                                     Page 30 of 158

                     If you purchased a $300 stereo with $150 cash and $150 credit, the
                     property is $300, but in terms of property rights the creditor’s
                     financial claim is $150, and the owner’s financial claim is $150.
2. Financial Claims in Accounting
Asset:               Property or items of value owned by a business (e.g., cash, office
                     equipment, buildings, land)
Equity:              The total financial claims to assets or property of a business for
                     both creditors and owners
Owner’s Equity:      The owner’s claims to the assets of the business in a dollar amount
Liabilities:         The creditor’s claims to the assets of the business; the debts of a
                     business

Basic Accounting Equation: The relationship between assets and total equities, liabilities
                           plus owner’s equity

                             Assets = Liabilities + Owner’s Equity

Medial Summary:       What does equity mean?

Drill:                The equation below shows the relationship between property and
                      its corresponding financial claims. Use the equation to answer the
                      questions that follow:

                     Property = Creditor’s Financial Claim + Owner’s Financial
                     Claim

1. What are the missing dollar amounts in each equation?
a.     Property (?) = Creditor’s Claim ($1,000) + Owner’s Claim ($6,000)
   b.     Property ($2,000) = Creditor’s Claim ($500) + Owner’s Claim (?)
   c.     Property ($30,000) = Creditor’s Claim (?) + Owner’s Claim ($22,000)
2. What is the amount of a creditor’s claim to a radio if the radio cost $75, and the
   owner has paid $35 on it?
3. What is the amount of the owner’s claim to a baseball glove if the glove cost $32, and
   the amount still owed is $12?
4. What was the cost of an automobile if the owner has a $3,000 claim, and a creditor
   has an $11,000 claim?




Application:
Classwork:
For each of the claims mentioned in the drill, students write, using full sentences whether
the missing amount is an asset, a liability or owner’s equity. Then students write one
paragraph explaining why equity and balance in the accounting equation is important.
Accounting 1 Curriculum                                                   Page 31 of 158

Homework:
Students list ten personal assets on a sheet of paper, then consider how they acquired
those assets. Did they purchase them? Were they gifts? Then students list any liabilities
that they have and determine their equity based on their assets and liabilities.

Final Summary:        How do we define equity?

Objective 1. Students will be able to describe the relationship between property and
property rights.
Objective 2. Students will be able to explain the meaning of “equity” as it is used in
accounting.

Standards Addressed: E1c, E2a, E2b, E2c, E2d, E4a, E4a, E4b, E7a, CDOS1,
CDOS2, CDOS3, CDOS3A, CDOS3B, T1, T2, T3, T7, SS1, SS4, S1, S2, S3.
Accounting 1 Curriculum                                                   Page 32 of 158



                               Chapter 4 Lesson Plan
Topic:                Analyzing Transactions Affecting Assets, Liabilities and Owner’s
                      Equity

Objectives:           Students will be able to:
                      1. Understand that for each business transaction, one account gets
                      debited, and one account gets credited.
                      2. Analyze a business transaction using debits and credits.
                      3. Construct T accounts, representing debits and credits
                      4. Explain which two balances of an accounting equation were
                         affected by a business transaction, using T accounts as a tool.

Materials:            Text, Glencoe Accounting: First-Year Course, pp. 42-46.

Do Now:               What are three ways in which you could borrow money to
                      purchase a car? (Savings and Loans, Banks, Credit Unions, Auto
                      Dealerships, Finance Companies).

Motivation:           1. Would you be purchasing this as an asset automatically, or
                         would you be borrowing money? (Borrowing money.)
                      2. What do we call it when you borrow money? (purchasing on
                      credit.)
                      3. When you buy items on credit, how does that affect your
                      owner’s equity? (It increases it, and the owner’s equity
                      decreases as you pay it off. )
                      4. As you pay off the car loan, what happens to your assets then?
                      (They increase as you make payments as well.)
                      5. For each business transaction, how many accounts are
                          affected? (At least two.)

Aim:                  How do we use T accounts in an accounting system?

Development:
1. Double-entry accounting system.
    Since at least two accounts are affected for every business transaction that takes
place, we call the financial recordkeeping system a double-entry accounting system.
2. The T account is an efficient way to show increases or decreases in an account caused
    by a transaction or to analyze the parts of a transaction.
a.      The Title always goes on the top of a T account.
b.      A debit is an amount entered on the left side of the T account.
c.      A credit is an amount entered on the right side of the T account.
3. Debits and Credits are used to record the increases and decreases in each account
    affected by a business transaction. For each debit made on one account, a credit of an
    equal amount must be made in another account.

4. Rules for Asset Accounts
Accounting 1 Curriculum                                                   Page 33 of 158


    An asset account is increased on the debit side.
    An asset account is decreased on the credit side.
    The normal balance for an asset account is a debit balance.
   The balance side is always the same as the side used to record increases to the
   account.
5. Rules for Liability and Owner’s Equity Accounts
    The liability and capital accounts are increased on the credit side.
    The liability and capital accounts are decreased on the debit side.
    The normal balance for the liability and capital accounts is a credit balance.
6. Summary of the Rules of Debit and Credit
ASSETS                =      LIABILITIES            +       OWNER’S EQUITY
Asset Accounts        =      Liability Accounts     +       Capital Account

Debit     Credit             Debit    Credit                 Debit        Credit
+            -               +             -                     +        -
Increase Decrease            Decrease Increase             Decrease       Increase
Side/    Side                Side     Side/                Side           Side
Balance                               Balance Side                        Balance Side
Side

Medial Summary:       Why do we use T accounts in accounting?

Drill:
Answer the following questions using the rules of debit and credit for liabilities and
capital:
1. Liability and capital accounts are increased on the ______________ side.
2. Liability and capital accounts are decreased on the _____________ side.
3. The normal balance side for liability and capital accounts is the ______________.
4. On notebook paper, draw a T account for the liability account Accounts Payable.
   Enter debits of $600, $200, and $400. Enter credits of $700, $500 and $300. What is
   the amount of the balance, and on what side of the T account is it shown?
5. Draw a T account for the account, P. Vance, Capital. Enter debits of $1,500 and
   $700. Enter credits of $9,000, $3,000 and $1,500. What is the amount of the
   balance, and on what side of the T account is it shown?

Application:
Classwork:
Group students in threes. Ask each member of a team to write two typical business
transactions for a video rental business on 3 X 5 cards. Have the members of the team
analyze each transaction, and on the back of the card write the accounts affected and
whether they increase or decrease. Then ask each team to pass its cards on to another
team. The second team answers the questions and then compares their answers with
those written on the backs of the cards.
Accounting 1 Curriculum                                                   Page 34 of 158

Homework:
Students are given a series of T accounts and transactions for a cleaning service.
Students perform the following:
        Prepare a T account for each account listed above.
        Analyze and record each of the following business transactions in the
           appropriate T accounts. Identify each transaction by number.
        After recording all transactions, compute and record the account balance on
           the normal balance side of each T account.
        Add the balances of those accounts with normal debit balances.
        Add the balances of those accounts with normal credit balances.
        Compare the totals. Are they the same?
        List for each account whether it is an asset, a liability or owner’s equity.
        Explain in writing, using complete sentences, for each transaction what
           account gets debited, and what account gets credited.
           Explain in writing, using complete sentences, how each transaction affects the
           basic accounting equation.

Final Summary:        How do we use T accounts in an accounting system?

Objective 1. Students will be able to list and apply the rules of debit and credit for
asset, liability and owner’s equity accounts.
Standards: E1c, E3c, E4a, E5a, E6a, E7a, CDOS1, CDOS2, CDOS3, CDOS3A,
CDOS3B, T1, T2, T3, T7, SS4, S1, S2, S7
Accounting 1 Curriculum                                                 Page 35 of 158



                             Chapter 5 Lesson Plan
Topic:             Transactions that Affect Revenue, Expenses, and Withdrawals

Objectives:        Students will be able to:
                   1. Define what a permanent account is, and what a temporary
                   capital account is.
                   2. Identify what a temporary capital account is.
                   3. Understand how permanent accounts and temporary capital
                      accounts are both used in accounting.
                   4. Differentiate between permanent and temporary capital
                      accounts.
                   5. Know the rules of debit and credit for revenue, expense and
                      withdrawals accounts.
                   6. List the rules of debit and credit for revenue, expense and
                      withdrawals accounts, using business transactions.
                   7. Understand the rules of debit and credit for revenue, expense
                      and withdrawals accounts.
                   8. Apply the rules of debit and credit for revenue, expense and
                      withdrawals accounts, using business transactions.

Materials:         Text, Glencoe Accounting: First-Year Course, pp. 60-66

Do Now:            (Teacher) Draw 3 T accounts: one for revenue, one for expenses
                   and one for withdrawals.
                   (Students) What are the rules of debit and credit for revenue,
                   expenses and withdrawals? Write the rules for each inside of each
                   account.

Motivation:        1. What is the effect of revenue on capital?
                   2. What is the effect of expenses on capital?
                   3. What is the effect of withdrawals on capital?
                   4. What are the two goals of a business? (To make a profit and to
                      be socially responsible.)
                   5. The main goal is to make a profit. How do we know if a
                      business is making a profit? (We must know specific
                      information regarding operating costs of a business, and
                      revenue earned from the sale of products or services, or we
                      look at the income.)
                   6. How do we calculate income? (Revenue minus expenses.)
                   7. In order to look for income, we are looking at specific
                      information regarding accounting, the revenue, expense and
                      withdrawals accounts.

Aim:               What are the rules of debit and credit for temporary capital
                   accounts?
Accounting 1 Curriculum                                                  Page 36 of 158


Development:
1. How do we look at the owner’s investment, or equity, in a business? (We look at the
owner’s capital account.)
2. Can anything affect or change owner’s capital? (Revenues, expenses and
   withdrawals all increase or decrease capital accounts, changing the owner’s equity.)
3. How can we more efficiently record information about revenue, expenses and
   withdrawals? (to set up separate accounts for each of these items)
   a. temporary capital accounts: revenue, expense and withdrawals accounts
    each start with a zero balance at end of period
    amounts recorded accumulate for only one accounting period
    b. permanent accounts:           owner’s capital account, assets, liabilities
     continuous from one accounting period to the next
     balances are carried forward to the next period
4. Rules of Debit and Credit for Temporary Capital Accounts
   What are the rules of debit and credit for assets, liabilities and owner’s capital?
(Review)
    a. Rules for Revenue Accounts (show using T account)
     increased on the credit side
     decreased on the debit side
     normal balance for revenue account is a credit balance
     the Normal Balance for any account is the same side as the side used to increase
        that account
     b. Rules for Expense Accounts (Show using T accounts)
      increased on the debit side
      decreased on the credit side
      normal balance for expense account is a debit balance
     c. Rules for Withdrawals Account (Show using T accounts)
      increased by debits
      decreased by credits
      the normal balance for the withdrawals account is a debit balance.

Medial Summary:       How can we summarize the rules for debit and credit?

Drill:                Students answer the following questions using full sentences
                      regarding revenue, expense and withdrawals accounts:
                       What is the normal balance side of any account?
                       What effect does a debit have on an expense account?
                       What is the normal balance for a revenue account?
                       What effect does a credit have on a revenue account?
                       What is the normal balance for an expense account?
                       What effect does a credit have on a withdrawals account?
                       What is the normal balance for a withdrawals account?
Accounting 1 Curriculum                                                    Page 37 of 158


Application:
Classwork:
Students are given a case where a teenager started to mow lawns for his neighbors last
Spring. By the end of July, that teen was mowing seven different lawns a week. He
calculated his income for the rest of the summer, with the expectation of buying a new
mountain bike before school started. The teen easily calculated his earnings, but he failed
to account for any expenses. What expenses could this teen have? What other reasons
may that teen not earn the total amount as calculated? Students answer the
aforementioned questions in writing using full sentences. Students prepare to discuss
their answers in class.

Homework:
Students work in groups of fours to prepare a short, informal business presentation in
which they clearly explain to a client the difference between a temporary capital account
and a permanent account. Students should be able to describe not only what the accounts
are, but why the two types of accounts are necessary.

Final Summary:        What are the rules of debit and credit for temporary capital
                      accounts?


Objective 1. Students will be able to explain the difference between permanent
accounts and temporary capital accounts.
Standards: E2a, E3c, E3e, E4a, E4b, E7a, CDOS1, CDOS2, CDOS3, CDOS3A,
CDOS3B, T1, T2, T3, T7, SS4, S1, S2, S7
Accounting 1 Curriculum                                                      Page 38 of 158



                                Chapter 6 Lesson Plan
Topic:                 Recording Transactions in a General Journal

Objectives:            Students will be able to:
                       1. Know the three steps in the accounting cycle.
                       2. List the three steps in the accounting cycle.
                       3. Understand the three steps in the accounting cycle.
                       4. Describe the three steps in the accounting cycle.

Materials:             Text, Glencoe Accounting: First-Year Course, pp. 84-87.
                       Examples of source documents (e.g., an account statement from
                       the telephone company, an invoice for office supplies)

Do Now:                Give students two examples of businesses, and identify the fiscal
                       period used by each. Then give students a sample accounting
                       period for school, such as July 1 to June 30 because State
                       legislation requires that time period for a fiscal year. (To Students:
                       Why may each business use that particular fiscal period?)

Motivation:            1. What is a fiscal period? (a certain period of time where
                          accounting records are kept and summarized.)
                       2. Why do businesses need to have a fiscal period? (so that
                       accounting records for activities that help the business can be
                       kept in an orderly fashion)
                       3. Does the fiscal period have to be for a specific period of time?
                           (Usually it is a year, sometimes it can be a quarter of a year or
                           even a month.)
                       4. Why does each business have a different fiscal period? (To
                           best suit the needs of each business; They can start at any time
                           of the year.)

Aim:                   How can we describe the first three steps of the accounting cycle?

Development:
1. The accounting cycle is the activities that the fiscal period of a business are separated
   into to help keep the accounting records in an orderly fashion.
2. List the ten steps in the accounting cycle.
    Collect source documents and verify the financial information on them.
    Analyze business transactions into their debit and credit parts.
    Record the debit and credit parts of each business transaction in a journal.
    Post each journal entry to the ledger accounts.
    Prepare a trial balance.
    Prepare a work sheet to summarize the financial information for the accounting
       period.
    Prepare the financial statements.
    Record and post the closing entries.
Accounting 1 Curriculum                                                    Page 39 of 158

3. Step 1: Collecting and Verifying Source Documents
   a. source document: a paper that is prepared as evidence of a transaction when
                         that business transaction occurs.
b. types of source documents
       invoice:             a form that lists specific information about a business
                             transaction involving the buying or selling of an item.
       receipt:             a form prepared as a record of cash received by a business
       memorandum:          a brief message written to describe a transaction that takes
                             place within a business
       check stub:          the part remaining in the business’s checkbook after a
                             check has been torn out.
4. Step 2: Analyzing Business Transactions
   a. We have already learned to do this using the rules of debit and credit.
5. Recording Business Transactions in a Journal
    journal:                                a chronological record of a business’s
                                              transactions
    journalizing:                           the process of recording these business
                                              transactions in a journal
    manual accounting system:              information is recorded by hand
    computerized accounting system: information is recorded by entering it into a
                                            computer

Medial Summary:       What are the first three steps of the accounting cycle?

Drill:                Students answer the following questions using full sentences:
                      1. A period of time into which a business separates its accounting
                      records is called a(n) ___________________.
                      2. The accounting _______________ includes all the activities
                      that help a business keep its accounting records during its
                      ____________________.
                      3. Papers prepared as records of business transactions are called
                          ____________________.

Application:
Classwork and Homework:
Students work in groups to list and describe the various source documents that a service
business, such as a hair salon, would receive and generate for normal business activities
(include source documents generated to order supplies). Have students ask questions at a
local hair salon to gather ideas.

Homework:
Students use the following accounts to record business transactions for a new day care
center: Cash in Bank, Accounts Receivable-Tiny Tots Nursery, Office Furniture, Delivery
Van, Accounts Payable-Acme Truck Service, Capital, Withdrawals, Day Care Fees, Rent
Expense, Utilities Expense, Van Expense. Construct a form with the following columns:
Transaction Number, Account Title, Account Classification, Account Increase, Account
Accounting 1 Curriculum                                                   Page 40 of 158

Decrease, General Journal Debit, General Journal Credit. For a series of six
transactions:
         Determine which accounts are affected
         Classify each account
         Determine whether the accounts are being increased or decreased
         Indicate which account is debited and which account is credited in the general
           journal entry

Final Summary:        How can we describe the first three steps of the accounting cycle?

Objective 1. Students will be able to describe the first three steps in the accounting
cycle.
Standards Addressed: E1c, E2a, E2d, E4a, E7b, CDOS1, CDOS2, CDOS3, CDOS3A,
CDOS3B, CDOS7, SS4

Objective 2. Students will be able to explain why source documents are created and
give several examples of source documents.

Standards Addressed: E1c, E2a, E2c, E3b, E3c, E4a, E5a, E5b, E7a, E7b, CDOS1,
CDOS2, CDOS3, CDOS3A, CDOS3B, T1, T2, T3, T7, SS4, S1, S2, S7
Accounting 1 Curriculum                                                     Page 41 of 158


                                 Chapter 7 Lesson Plan
Topic:                 Posting Journal Entries to a General Journal

Objectives:            Students will be able to:
                       1. Record business transactions in the general journal.
                       2. Post business transactions from a general journal to ledger
                          accounts accurately.

Materials:             Text, Glencoe Accounting: First-Year Course, pp. 111-117.
                       Sample ledger accounts, sample general journal

Do Now:                How do we open accounts in the general ledger?

Motivation:           1. How is information in the general journal recorded? (in
                         chronological order)
                      2. Can an owner or manager use the journal to quickly see how
                      business transactions affect specific accounts? (no)
                      3. Why not? (We need to look at individual accounts in order to
                      do that.)
                   4. What do we call those individual accounts? (ledger accounts)
                      5. How do we use the general journal to figure out the balances of
                          the individual accounts that are affected by each transaction?
                          (posting process)

Aim:                   How do we post business transactions from the general journal to
                       ledger accounts?

Development:
1. The Posting Process
a.     We transfer information from entries in the general journal to ledger accounts.
b.     We post from left to right.
c.     Steps in the posting process
        Enter date of journal entry
        Explanation column is usually blank
        Enter journal letter and page number in Post. Ref. Column
        Enter debit amount
        Compute the account balance
        Enter the account number in the general journal Post. Ref. Column
        Repeat steps #1-6 for the credit part of the journal entry
2. Note that for each journal entry, students will post to at least two ledger accounts, one
   for the debit portion of the entry and one for the credit portion of the entry.
3. Some ledger accounts show a zero balance.
4. To transfer information from one page of an account to the next, follow the steps (for
   opening an account with a balance):
        Write the account title at the top of the new page
        Enter the account number
Accounting 1 Curriculum                                                     Page 42 of 158


            Enter the complete date (year, month, day) of the last entry on the previous
             account page
            Write the word “Balance” in the Explanation column of the new account page
            Place a check mark in the Posting Reference column to show that the amount
             entered on this line is not being posted from a journal
            Enter the amount of the balance in the appropriate balance column of the new
             page

Medial Summary:        What are the steps taken to post business transactions to ledger
                       accounts from the general journal?

Drill:                 Students answer the following questions on a sheet of notebook
                       paper, using full sentences:
                        What is recorded in the Posting Reference column of a ledger
                          account?
                        Cash in Bank has a balance of $4,350. If a credit of $150 is
                          posted to the account, what is the new balance of Cash in
                          Bank?
                        What does a dash in a Balance column of a ledger account
                          indicate?
                        When is a check mark entered in the Posting Reference column
                          of a ledger account?
                        You are opening a new page for Accounts Payable-Apex
                          Systems. In which Column would you enter the balance of
                          $1,650?

Application:
Classwork:
Students post journal entries to the appropriate accounts in the ledger, and then prove the
ledger by preparing a trial balance, given the following situation.
        Mr. Tuthee started a dental service. The accounts used by the dental business
        have been opened and are included in the working papers accompanying this
        textbook. The general journals for business transactions conducted during the
        month of May are also included in the working papers.

Homework:
Students act as an accounting clerk for a small manufacturer. The senior accounting
clerk asked you to prepare the trial balance for the month. The totals on your trial
balance are not equal, and you cannot find the error that has been made. You are
frustrated and consider changing one of the account balances in order to get the trial
balance to balance. Students discuss what they would do in two paragraphs, and why
they chose that particular decision.

Final Summary:         How do we post business transactions from the general journal to
                       ledger accounts?
Accounting 1 Curriculum                                               Page 43 of 158


Objective 2. Students will be able to accurately post business transactions from a
general journal to the accounts in the ledger.

Standards Addressed: E1c, E3c, E4a, E4b, E5a, E6a, E7a, E7b, CDOS1, CDOS2,
CDOS3, CDOS3A, CDOS3B, T1, T2, T3, T7, SS4, S1, S2,S7
Accounting 1 Curriculum                                                    Page 44 of 158


                               Chapter 8 Lesson Plan
Topic:                The Six-Column Work Sheet

Objectives:           Students will be able to:
                      1. Know the parts of a six-column work sheet.
                      2. List the parts of a six-column work sheet.
                      3. Understand the parts of a six-column work sheet.
                      4. Construct a six-column work sheet

Materials:            Text, Glencoe Accounting: First-Year Course, pp. 131-136.
                      Sample Work Sheet

Do Now:               List the first five steps of the accounting cycle.

Motivation:           1. Is the fiscal period for all businesses the same? Why or why
                         not? (No. Different businesses record different activities in
                         different ways.)
                      2. The first five steps of the accounting cycle are performed
                      frequently during the cycle. The last four steps complete the
                      cycle.
                      3. What may be the sixth step of the accounting cycle? (to take
                      the ledger account information and put it all on one sheet of
                      paper)
                      4. Why is this done? (like an accountant’s tool, the work sheet
                          pulls together all of the information needed to prepare the
                          financial statements and complete the rest of the end-of-fiscal-
                          period activities)

Aim:                  How do we construct a six-column work sheet?

Development:
1. The Heading
                     a. Name of business
                     b. Name of accounting form
                     c. Fiscal period covered by the work sheet
2. The Account Title and 3. Trial Balance Sections
   a. taken from the general ledger accounts
   b. Trial Balance is prepared as part of work sheet when prepared at end of fiscal
      period (otherwise it is prepared at any time during the fiscal period to prove the
      general ledger).
   c. Trial balance for each account gets entered into Trial Balance section in
      corresponding column to normal balance side
4. Ruling and Totaling the Trial Balance Section
   a. Ruling:        drawing a line
   b. single rule drawn under a column of amounts means that the entries above the line
      are either added or subtracted
Accounting 1 Curriculum                                                      Page 45 of 158

   c. once all account titles and balances have been entered on the work sheet, a single
       line is drawn under the last entry and across the entire Trial Balance section
   d. check for errors
5. Balance Sheet Section
   a. balances of asset, liability and owner’s equity accounts
   b. amounts from trial balance get extended to Balance Sheet section
6. Income Statement Section
   a. contains balances of revenue and expense accounts
   b. accounts listed on work sheet after asset, liability and owner’s equity accounts
       (extended to Income Statement section after Balance Sheet section)
   c. Revenue accounts--have normal credit balance
   d. Expense accounts--have normal debit balance
7. Total Income Statement and Balance Sheet Sections

Medial Summary:        What are the steps that we take in order to construct a six-column
                       work sheet?

Drill:                 Students decide whether or not the following errors would be
                       revealed by a trial balance using full sentences:
                        A credit entry was never posted.
                        An entire entry was never posted.
                        A transaction was not journalized.
                        A transaction was posted to the wrong account.

Application:
Classwork:
Divide students into groups of four, and give each group a list of several account titles.
Ask students to classify each account as a temporary or permanent account and then
determine whether each account balance is extended to the Income Statement or the
Balance Sheet section of the work sheet.

Homework:
Students are given final balances in the following ledger accounts for a travel center for
the fiscal period ended June 30:
        Cash in Bank
        Accounts Receivable, F. Perkins
        Accounts Receivable, J. Nudre
        Office Equipment
        Computer Equipment
        Office Furniture
        Accounts Payable, T. Co.
        Accounts Payable, S. Corp.
        Accounts Payable, LKH Co.
        Capital
        Withdrawals
        Income Summary
        Commissions Revenue
Accounting 1 Curriculum                                                  Page 46 of 158

        Advertising Expense
        Entertainment Expense
        Miscellaneous Expense
        Rent Expense
        Utilities Expense
Students use the preceding accounts to prepare a work sheet of the travel center. The
center operates on a three-month fiscal period. Students then explain how each account
affects the basic accounting equation both orally and in writing.

Final Summary:        How do we construct a six-column work sheet?


Objective 3. Students will be able to prepare a six-column work sheet.
Standards Addressed: E1c, E3c, E4a, E4b, E5a, E6a, E7a, E7b, CDOS1, CDOS2,
CDOS3, CDOS3A, CDOS3B, T1, T2, T3, T7, SS4, S1, S2
Accounting 1 Curriculum                                                    Page 47 of 158



                                 Chapter 9 Lesson Plan
Topic:                 Financial Statements for a Sole Propietorship

Objectives:            Students will be able to:
                       1. Know the purpose of the statement of changes in owner’s
                       equity.
                       2. Understand the purpose of the statement of changes in owner’s
                       equity.
                       3. Explain the purpose of the statement of changes in owner’s
                       equity.
                       4. Construct the statement of changes in owner’s equity.

Materials:            Text, Glencoe Accounting: First-Year Course, pp. 154 (bottom)-
                      157 (top)
         Sample Statement of Changes in Owner’s Equity

Do Now:                Why is the date line in the heading of an income statement critical?
                       (Because it identifies the fiscal period)

Motivation:            1. Why is the date line so important in an income statement?
                          (Because without the date line, you would not know whether
                          the reported net income was earned in a month, a quarter or a
                          year)
                       2. What is the most important thing to a business owner?
                       (Whether or not he/she is profiting, whether the equity in the
                       business has increased or decreased during the fiscal period)
                       3. If owner’s equity increases, what happens to the assets? (They
                       increase.) If owner’s equity decreases, what happens to assets?
                       (They decrease).
                       4. During a fiscal period, how are transactions involving
                       investments recorded? (in the capital account)
                       5. How are transactions affecting revenue, expenses and
                           withdrawals recorded? (In separate accounts)

Aim:                   How do we prepare a statement of changes in owner’s equity?

Development:
1. Statement of Changes in Owner’s Equity: A financial statement prepared to
   summarize the effects on the capital account of the various business transactions that
   occurred during the period.

2. Serves as support document for balance sheet. Information comes from:
    Work sheet
    Income statement
    Capital account in general ledger
Accounting 1 Curriculum                                                  Page 48 of 158

3. Steps to complete changes in owner’s equity:
    On first line, write, “Beginning Capital”, followed by first day of fiscal period.
    In second amount column, enter the balance of the capital account at beginning of
      fiscal period. Enter dash in second amount column (Source: capital account in
      general ledger)
    Enter increases to capital account (e.g., investments by owner and net income).
      First, write, “Add” at left side of form.
           a. The first addition would be any investments by the owner during the
           period. This information is found in the capital account in the general
           ledger.
           b. On next line, write “Net Income”. Enter amount of net income (taken
           from income statement) in first amount column. Draw single rule under
           the investment and net income amounts.
           Write words “Total Increase in Capital” on next line at left edge of form.
           Add total investments and net income amounts, and enter total in second
           amount column. Draw a single rule under amount.
    Write “Subtotal” on next line, at left edge of form. Add amounts for beginning
      capital and total increase in capital. Enter total in second amount column.
    List decreases to capital account (withdrawals and net loss).
    Write words, “Ending Capital”, followed by the last day of the fiscal period.
    Subtract the withdrawals amount from the subtotal to determine the new ending
      balance of the capital account. Finally, draw a double rule below the ending
      capital amount.

Medial Summary:      What are the steps taken to prepare a statement of changes in
                     owner’s equity?

Drill:               Students answer the following questions about the statement of
                     changes in owner’s equity, using full sentences:
                      The statement of changes in owner’s equity is prepared to
                        reflect the changes in the ________ from the beginning of the
                        period to the end.
                      The wording in the date line for the statement of changes in
                        owner’s equity is the same as that used for the ____________.
                      If the owner invested $20,000 during the period covered by this
                        statement, and net income was $3,200, the ending balance in
                        the capital account is ___________.
                      The information on the statement of changes in owner’s equity
                        is used in preparing the _________________.
Accounting 1 Curriculum                                                     Page 49 of 158


Application:
Classwork:
Students are given the financial data affecting the capital accounts for several different
businesses. Students use the form in the working papers or on plain paper to determine
the ending capital balance for each business. Students then explain the relevance of
determining the ending capital balance both orally and in writing. Students prepare to
discuss their answers with the class.

Homework:
Students are given a prepared trial balance for an amusement center, included in the
working papers. Students then:
        Complete the work sheet.
        Prepare an income statement for the quarter ended March 31.
        Prepare a statement of changes in owner’s equity. No additional investments
           were made during the period.
        Prepare a balance sheet in report form.
        Discuss the purpose of preparing an income statement both orally and in
           writing.
        Discuss the purpose of preparing an income statement both orally and in
           writing.
        Discuss the purpose of a statement of changes in owner’s equity both orally
           and in writing.

Final Summary:         How do we prepare a statement of changes in owner’s equity?

Objective 4. Students will be able to prepare a statement of changes in owner’s
equity.

Standards Addressed: E1c, E3c, E4a, E4b, E5a, E6a, E7a, E7b, CDOS1, CDOS2,
CDOS3, CDOS3A, CDOS3B, T1, T2, T3, T7, SS1, SS4, S1, S2, S7
Accounting 1 Curriculum                                                     Page 50 of 158


                              Chapter 10 Lesson Plan
Topic:                Completing the Accounting Cycle for a Sole Proprietorship

Objectives:           Students will be able to:
                      1. Understand the purpose of temporary capital accounts.
                      2. Explain why the temporary capital accounts are closed at the
                         end of the fiscal period.
                      3. Know the purpose of the Income Summary account.
                      4. Understand the purpose of the Income Summary account.
                      5. Explain the purpose of the Income Summary account.
                      6. To decide what gets debited and what gets credited for closing
                         entries.
                      7. Analyze closing entries.

Materials:            Text, Glencoe Accounting: First-Year Course, pp. 169-173.

Do Now:               List the first seven steps of the accounting cycle.

Motivation:           1. What are the first seven steps in the accounting cycle?
                      2. Are each of the accounts permanent or temporary?
                      3. Are capital accounts temporary or permanent?
                      4. Why are the accounts cleared at the end of the accounting
                         cycle?
                      5. Why do we use closing entries?

Aim:                  How do we complete the accounting cycle for a sole
                      proprietorship?

Development:
1. Eighth and Ninth Steps in the Accounting Cycle
a.     Closing Entries (Journal Entries)
        Close all temporary capital accounts
        Transfer balances to capital accounts
b.     Trial Balance
        Proves equality of general ledger
   c. Post-Closing Trial Balance
2. The Closing Process
a.     to reduce the revenue and expense account balances to zero
b.     to transfer the net income or net loss for the period to the capital account
3. The Income Summary Account
a.     used to accumulate and summarize the revenue and expenses for the period.
b.     the account balance equals the net income or net loss for the fiscal period.
4. Journalizing the Closing Entries
a. Steps
    The balance of the revenue account is transferred to the credit side of the Income
       Summary account.
Accounting 1 Curriculum                                                     Page 51 of 158


      The expense account balances are transferred to the debit side of the Income
       Summary account.
    The balance of the Income Summary account is transferred to the capital account
       (net income to the credit side; net loss to the debit side).
    The balance of the withdrawals account is transferred to the debit side of the
       capital account.
    b. The work sheet is the source of the information for the closing entries.
    c. Closing the Balance of the Revenue Account into Income Summary
    Write the words, “Closing Entries”, in the center of the Description column. If
       you are recording the closing entries on a journal page that contains other entries,
       skip a line after the last entry. If you begin the closing entries on a new journal
       page, write the heading: Closing Entries” on the first line. This heading is the
       explanation for all the closing entries.
    Enter the date (the last day of the fiscal period) in the Date column.
    Enter the title of the account(s) debited and the amount of the debit.
    Enter the title of the account credited and the amount of the credit.
    Debit each revenue account for the amount of its credit balance. Credit Income
       Summary of the amount of total revenue.
      d. Closing the Balances of the Expense Accounts into Income Summary (2nd
      closing entry)
    Compound entry: A journal entry having two or more debits or two or more
       credits.
    Debit Income Summary for the amount of total expenses. Credit each expense
       account for the amount of its debit balance.

Medial Summary:       What are the steps that we take to close the accounting cycle for a
                      sole proprietorship?
Drill:                Students answer the following using full sentences:
                      1. A closing entry must be made for the account Ticket Revenue,
                      which has a balance of $6,000.
                          a. What is the title of the account debited?
                          b. What is the title of the account credited?
                          c. What is the amount of the debit? The credit?
                      2. A business has three expense accounts: Gas and Oil Expense
                      (balance: $700), Miscellaneous Expense (balance: $600), and
                      Utilities Expense (balance: $1,800). The end of the business’s
                      fiscal period is June 30.
                          a. The date of the journal entry to close these accounts is
                          _______________.
                          b. The account debited is _________.
                          c. The amount of the debit is _________.
                          d. The accounts credited are ___________.
                          e. The amounts of the credits are ____________.
Application:
Classwork:
Students are faced with a situation where a new employee was assigned to work with
Accounting 1 Curriculum                                                    Page 52 of 158

them on several important projects in their office. The student has found that that new
employee is not well organized and often has to redo his/her part of an assignment. As a
result of this person’s work, the student has already missed his/her first deadline.
Students answer the following questions using full sentences:
                         What should you say to the student?
                         How would you explain this problem to his/her supervisor?
                         What can be done to make sure you do not miss future
                           deadlines?

Homework:
Students are given a series of account titles and balances as they appear on a work sheet
for a contractor. The work sheet was for the month ended July 31. Students use the
account titles and balances to record closing entries for the contractor, using general
journal page 11.


Final Summary:        How do we complete the accounting cycle for a sole
                      proprietorship?


Objective 1. Students will able to explain why the temporary capital accounts are
closed at then end of the fiscal period.

Standards Addressed: E1c, E2a, E4a, E4b, E5b, CDOS1, CDOS2, CDOS3, CDOS3A,
CDOS3B, CDOS7, SS4, S1, S2

Objective 2. Students will be able to explain the purpose of the Income Summary
account.

Objective 4. Students will be able to analyze and journalize closing entries.
Standards Addressed: E1c, E3c, E4a, E4b, E5a, E6a, E7a, E7b, CDOS1, CDOS2,
CDOS3, CDOS3A, CDOS3B, T1, T2, T3, T7, SS4, S1, S2, S7
Accounting 1 Curriculum                                                     Page 53 of 158


CASES:

Adam is a college sophomore and is required to select a major at his school by the end of
the semester. Still not sure what aspect of business to major in, his father said that
accounting has always been a good profession. Adam has the skill set for the major and
enjoyed his high school accounting classes, yet doesn’t know whether to concentrate on
public or managerial accounting and the careers that they have to offer. By performing
research on the Internet, provide a description of 5 career paths in public accounting that
Adam can follow after he graduates in a couple of year. Five (5) managerial positions?
Accounting 1 Curriculum                                                      Page 54 of 158


                                  Sample Rubrics

Directions: Rubrics are based on 5 to 10 assessment criteria, and can be generally
conceived of as intersecting with 4 evaluative categories. A certain number of points are
assigned to each category, the total points, when added together, will produce the
students’ grade value. For example, a sample rubric for an essay would be: rating Scale
from 1 to 5, with 1 being unacceptable, i.e. not meeting minimal standards, and 5 being
distinguished (See below)

1 = Unacceptable
2 = Acceptable
Includes the following: Minimally technically correct (conveys meaning); evidence of
some sound research.

3 = Fair
Includes the following: Technically correct; evidence of some sound research,
reasonably well presented, but lacking originality and critical distance.

4 = Good
Includes the following: Technically correct, thoroughly and soundly researched, well
presented some (but limited) evidence of creativity and/or originality, but lacking critical
distance.

5 = Distinguished
Includes the following: Technically correct (grammar, spelling, punctuation), thoroughly
and soundly researched; well presented; evidence of creativity and /or originality,
evidence of critical thinking.
Accounting 1 Curriculum                                      Page 55 of 158



Sample Rubrics for Accounting 1

   Criteria        Unsatisfactory   Average (3)   Good (4)   Excellent (5)
                      (1 &2)
Open a general
ledger account
for each account
in the chart of
accounts.
Analyze each
business
transaction.
Enter each
business
transaction in
the general
journal.
Post each
journal entry to
the appropriate
accounts in the
general ledger.
Prove the
general ledger
by preparing a
trial balance
Accounting 1 Curriculum                                        Page 56 of 158



    Criteria         Unsatisfactory   Average (3)   Good (4)   Excellent (5)
                        (1 &2)
Analyze
business
transactions.
Journalize
business
transactions in
the four special
journals and in
the general
journal.
Post journal
entries to the
general ledger
and the accounts
receivable and
accounts
payable
subsidiary
ledgers.
Post the totals of
the special
journals to the
general ledger.
Prove cash
Prepare a
schedule of
accounts
receivable and a
schedule of
accounts
payable.
Prepare a trial
balance and a
work sheet.
Prepare financial
statements.
Journalize and
post adjusting
and closing
entries.
Prepare a post-
closing trial
balance.
Accounting 1 Curriculum                                               Page 57 of 158


           Recommended Teaching Techniques and Strategies

Notes to Teachers

    Organize a specific activity/project
         Write an autobiography, resume, e-article for an online magazine, scripted
           dialogue, etc.
         Conduct WebQuests
         Enter ThinkQuest Projects
         Participate in a Classroom Connect “Quest,” e.g. “Greece Quest,”
           “Columbus Quest,” etc.

    Prepare specific lesson plans
         Use a Lesson Plan Template
                 Subject/Level & Quote
                 Unit Title & Lesson Number
                 Objectives
                 Crosswalk of Standards
                 Materials/Technology Link
                 Safety Procedures
                 Motivation
                 Aim
                 Description of Activities
                 Summary
                 Application
                 Assessment/Homework
         Create WebQuests

    Structure the classroom for cooperative activities
          Form groups and assign roles
                  Peer editing
                  Peer review of double-entry notebooks
                  Writing
                  Oral presentation
                  Debates
                  Panels
          Allow time for processing

    Integrate writing
          Writing process
          Journal writing
          NYS ELA Regents-like Tasks
          Poetic forms, e.g. sonnet, cinquain, haiku, etc.
          Autobiography
          Resume
          E-article for an online magazine
Accounting 1 Curriculum                                                  Page 58 of 158

             Scripted dialogue
             Reports
             Reaction papers
             E-mail

    Incorporate a specific learning technique/methodology into the curriculum
         Fishbowl
         Total Physical Response
         Interview w/video
         The Internet as an instructional tool
         Note-taking strategies
                 Cornell Note-taking System
                 Dictation
         Reading strategies
                 Chronology
                 Questioning the author
         Writing strategies
                 Paragraph formation
                 Essay organization
                 Plagiarism awareness

    Ensure student/staff safety
         Classroom management procedures
                 Create and maintain a teacher’s check list
                 Develop effective and realistic student expectations
                 Create a positive learning environment
         Know your School-based Support Team

    Manage machinery, equipment and materials
        Troubleshooting manual
               Network components
               Windows system problems
               Cables
               Floppy Disk
               Monitors
               Keyboard & Mouse
               Printers
        Know your tech support personnel at your school

    Provide for effective classroom operations
         Code of Conduct
         Classroom rules
         Homework policy
         Grading policy
         Student contract

    Integrate project-based learning
Accounting 1 Curriculum                                             Page 59 of 158

            WebQuests
            Create a Web page
            Classroom Connect (GreeceQuest, ColumbusQuest, etc.)
            Create a PowerPoint presentation
            Research essays

    Use the four-point summary
         What was the main idea of this lesson?
         What are two important details you remember?
         Make a personal connection.
         Generate a question.

    Manage vocabulary
        Identify words students don’t understand
        Use context clues to infer meaning
        Use a dictionary to clarify meaning and word usage
        Practice using new words in class discussion, homework assignments, and
           writing tasks
        Informal query
        Think-Pair-Share
        Text highlighting
        Text notation
        Vocabulary sandwich

    Use video clips/audiovisual equipment
         Embed in PowerPoint presentations
                Altavista.com
                Unitedstreaming.com
         Create Public Service Announcements with students on a topic of study
Accounting 1 Curriculum                                                    Page 60 of 158



Assessment Options
         Student learning is assessed via traditional and alternative methods. Assessment
activities are aligned with the Regents and Standards. Alternative testing modifications
are provided, as appropriate, for students with disabilities.

The following are recommended:

      Portfolio assessment: A collection of work to demonstrate growth in the subject
       and growth in writing skills.
      Journal writing: A daily writing activity that will encourage student responses to
       literature, and activate prior knowledge, or self-discovery.
      Project Options – Major Course projects, which integrate the CDOS and Applied
       Learning Standards, and content area standards, at the end of each unit.
      Performances/Oral Presentations: Individual or group student presentations.
       Teacher and peer evaluations are employed.
      Self/Peer Evaluation: Students are given the opportunity to evaluate their own
       work and that of their peers.
      Reports – Students produce I-Search or Research papers.
      Unit exams that:
            o Cover the topics discussed in the unit.
            o Address the objectives within each chapter of the unit.
            o Contain questions which focus on different levels of learning.
               (knowledge, comprehension, analysis/creativity).
      Chapter exams that:
            o Address the objectives within each chapter.
            o Contain questions which focus on different levels of learning.
               (knowledge, comprehension, analysis/creativity).
      Quizzes: Spot checks on two or three item evaluations are good ways to get
       written information from students. Given at the beginning or end of the period,
       they give the teacher an opportunity to check whether students have understood
       the day’s objective, several day’s cumulative information, or the previous night’s
       homework. A quick reading of these responses will indicate if anyone is not
       grasping a concept.
      Comprehensive midterm and final exams that:
            o Address the broadest goals of the course.
            o Bring out higher levels of learning and assess the student’s ability to
               analyze, synthesize, and create, using the mastery of objectives of the
               course.
            o Are in alignment with state standards and assessments.
            Accounting 1 Curriculum                                                            Page 61 of 158



            Appendix:

            Sample Examinations

                            Norman Thomas High School for Commercial Education
                                         Steve Satin, Principal (I.A.)
                            Department of Business, Foreign Languages and the Arts
                                     Gilberto Vega, Assistant Principal

Chapter 1 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. A professional organization, such as the American Institute of Certified Public Accountants,
           provides information to its members and works to promote interest and ongoing education in the
           career area.
____    2. Being able to make decisions is an important skill for someone interested in becoming a
           musician.
____    3. Responsibility is one example of a personality trait.
____    4. The more you know about yourself, the easier it will be to make career choices.
____    5. The Internet is a source of educational and career information.
____    6. In the U.S. economy, for-profit businesses are outnumbered by not-for-profit organizations.
____    7. One of the best ways to find out about particular careers is by talking to people who work in those
           fields.
____    8. Once you decide upon a career, you will probably stay in that career for the rest of your life.
____    9. Most careers require some education or training beyond high school.
____ 10. On-the-job training provides an opportunity to learn the ins and outs of a particular job and get
         paid while you're learning.
____ 11. Today, most accounting work is still done with pencil and paper.
____ 12. All businesses need accounting services.
____ 13. AT&T is an example of a not-for-profit organization.
____ 14. A CPA is a person who has passed a national test and met specified experience and educational
         standards to become "certified" to practice accounting.
____ 15. A person's skills are the principles by which they live and are the core of their belief system.
             Accounting 1 Curriculum                                                           Page 62 of 158


Yes/No
Indicate whether or not you agree with the sentence or statement.

             Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or
             with a large corporation after graduating from college. Indicate whether the following activities
             will help her achieve that goal.

____ 16. Join a social sorority at college.
____ 17. Finance college education.
____ 18. Take a summer job in the business office of a local performing arts center.
____ 19. Study in Europe during her junior year.
____ 20. Participate in an accounting-based internship program.
____ 21. Learn to prepare a résumé and write a cover letter.
____ 22. Volunteer during the school year at a homeless shelter.
____ 23. Pass CPA examination.


Matching

             Match each item with the correct statement below.
             a. career                                      f.   personal interest tests
             b. for-profit business                         g.   personality
             c. lifestyle                                   h.   public accounting
             d. networking                                  i.   skills
             e. not-for-profit organization                 j.   values
____     The principles you live by and the beliefs that are important to you are your ____.
       24.
____     The sharing of information and advice is called ____.
       25.
____     A(n) ____ operates to earn money for its owners.
       26.
____     Your ____ is the set of unique qualities that makes you different from all other people.
       27.
____     A(n) ____ firm provides accounting services to clients such as individuals or businesses.
       28.
____     ____ refers to the way a person uses his or her time, energy, and resources.
       29.
____     A person's ____ are his or her abilities, such as the ability to think creatively or to make
       30.
         decisions.
____ 31. A(n) ____ is work that is built on a foundation of interest, knowledge, training, and experience.
____ 32. A(n) ____ operates to support a cause or an interest.
____ 33. ____ can help you identify preferences that will have an impact on your career choice.


Problem

       34. You think that you might be interested in a career in accounting, and you would like to develop a
           career plan. Listed below are a number of steps that you should include in that plan. Put those
           steps in the correct order you should complete them. Use 1 for the first step and 7 for the last step.

             1. Complete a personal career profile.
             2. Prepare for the education or training the career requires.
Accounting 1 Curriculum                           Page 63 of 158

3.   Choose a career to pursue.
4.   Examine your values and lifestyle goals.
5.   Assess your interests, skills, and traits.
6.   Research possible careers.
7.   Select possible career choices.
           Accounting 1 Curriculum   Page 64 of 158


Chapter 1 Test
Answer Section

TRUE/FALSE

      1.   T
      2.   F
      3.   T
      4.   T
      5.   T
      6.   F
      7.   T
      8.   F
      9.   T
     10.   T
     11.   F
     12.   T
     13.   F
     14.   T
     15.   F


YES/NO

     16.   N
     17.   Y
     18.   Y
     19.   N
     20.   Y
     21.   Y
     22.   N
     23.   Y


MATCHING

     24.   J
     25.   D
     26.   B
     27.   G
     28.   H
     29.   C
     30.   I
     31.   A
     32.   E
     33.   F


PROBLEM
    Accounting 1 Curriculum   Page 65 of 158


34. 1.   3   5. 1
    2.   7   6. 4
    3.   6   7. 5
    4.   2
            Accounting 1 Curriculum                                                            Page 66 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

            Chapter 2 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. Only businesses that earn a profit will have the economic resources to continue to operate.
____    2. All types of businesses sell a product.
____    3. In a free enterprise system, businesses compete for customers.
____    4. One advantage of owning your own business is that any financial gain from operating the
           business is yours.
____    5. For accounting purposes, a business is an entity separate from its owners.
____    6. A business owner must always get permission to operate from the state government.
____    7. Basic accounting rules and procedures differ from business to business.
____    8. The corporation is the easiest form of business to organize.
____    9. All businesses set up their accounting systems in the same manner.
____ 10. Corporations often start out as sole proprietorships or partnerships.
____ 11. A business is earning a profit if the selling price of its product covers the cost of the raw materials
         needed to make the product.
____ 12. The life of a business is divided into specific periods for reporting purposes.
____ 13. A partnership can be owned by a more than two individuals.
____ 14. GAAP is a way to communicate financial information in a form understood by those interested in
         the operations and financial condition of the business.
____ 15. Service businesses are not intended to operate at a profit.


Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____ 16. The amount of money earned after the costs of operating a business are paid is ____.
         a. revenue                                      c. profit
         b. income                                       d. capital
____ 17. To survive, a business must ____.
         a. make a product consumers want and report profits to the IRS
         b. earn a profit and invest excess profits
         c. earn a profit and have someone willing to take the risk to run it
         d. have adequate start-up capital and prepare periodic reports
____ 18. In a business, it is the entrepreneur who ____.
         a. provides the labor needed to operate the business
           Accounting 1 Curriculum                                                          Page 67 of 158

           b. is willing to take the risks to establish and organize the venture
           c. supplies the capital needed to establish the business
           d. manages the financial aspects of the business
____ 19.   The type of business that provides a product or a service, makes sales to customers, and incurs
           expenses is ____.
           a. a service business                             c. a manufacturing business
           b. a merchandising business                       d. all of the above
____ 20.   Which of the following would not be considered a service business?
           a. General Motors                                 c. Delta Air Lines
           b. North American Van Lines                       d. Alamo Rent a Car
____ 21.   An example of an accounting assumption is ____.
           a. all businesses prepare reports for governmental review
           b. business transactions are regularly adjusted for inflation
           c. a business has the ability to operate indefinitely
           d. all businesses must pay taxes to the government in a timely fashion
____ 22.   The most common form of business organization is the ____.
           a. sole proprietorship                            c. corporation
           b. partnership                                    d. not-for-profit organization
____ 23.   Accounting is often call the "language of business" because ____.
           a. it is easy to understand
           b. it is fundamental to the communication of financial information
           c. all business owners have a good understanding of accounting principles
           d. accountants in many companies share financial information
____ 24.   The most common time period covered by an accounting report is one ____.
           a. quarter                                        c. month
           b. year                                           d. week
____ 25.   An example of an internal user of accounting information is ____.
           a. the Internal Revenue Service
           b. a large stockholder
           c. the president of a bank that has loaned money to the business
           d. the manager in charge of a specific product line
____ 26.   The assumption that requires accounting reports to be prepared for a specific period of time is
           ____.
           a. unit of measure                                c. business entity
           b. going concern                                  d. accounting period


Matching

           Match each item with the correct statement below.
           a. accounting period                           k.   GAAP
           b. accounting system                           l.   going concern
           c. business entity                             m.   loss
           d. capital                                     n.   management accounting
           e. charter                                     o.   manufacturing business
           f. corporation                                 p.   merchandising business
           g. entrepreneur                                q.   partnership
           h. free enterprise system                      r.   profit
           i. financial accounting                        s.   service business
           j. financial reports                           t.   sole proprietorship
            Accounting 1 Curriculum                                                            Page 68 of 158

____ 27. A(n) ____is an individual who transforms ideas for products or services into real-world
         businesses.
____ 28. ____ summarize information about the financial status of a business.
____ 29. Following the ____ accounting assumption, the accountant prepares reports as though the
         business will operate indefinitely.
____ 30. The ____ is the period of time covered by an accounting report.
____ 31. The ____ is designed to collect, document, and report on the financial transactions affecting the
         business.
____ 32. ____ is money invested in a business by its owner(s) or the money provided by banks or
         investors.
____ 33. ____ is the legal document giving a business the right to operate as a corporation.
____ 34. Under the ____ accounting assumption, a business owner must keep the financial records for the
         business separate from personal records.
____ 35. A(n) ____ is a business organization that must get permission from the state to operate.
____ 36. A business that produces items to sell to individuals and other businesses is known as a(n) ____.
____ 37. If a business spends more money to operate than it earns from the sale of goods or services, it is
         operating at a(n) ____.
____ 38. In a(n) ____, people are free to produce the goods and services they choose.
____ 39. A business with a single owner is a(n) ____.
____ 40. ____ are the rules accountants follow when recording and reporting accounting information.
____ 41. A business is operating at a(n) ____ if it earns more money than it spends.
____ 42. ____ is concerned with preparing reports for external users such as investors or creditors.
____ 43. A(n) ____ buys finished goods and sells them to individuals or other businesses.
____ 44. ____ is concerned with preparing information for internal users.
____ 45. A business that two or more people agree to own together is a(n) ____.
____ 46. A business that provides a needed service for a fee is called a(n) ____.


Short Answer

            Read the paragraph below and answer the questions.

            You and your friend Lou Novatna both love animals. Your family breeds poodles, and Lou
            studied to be a veterinary assistant. Last year, the two of you started a dog grooming business that
            you call Pampered Pooches. You also offer dog walking, dog "play groups," and some boarding.
            You and Lou worked hard and shared the responsibilities of the business. At the end of the first
            year, Pampered Pooches has earnings of $27,500. The costs to operate the business were $19,440.

      47. What type of business is Pampered Pooches?
      48. If you and Lou are both owners, what form of organization is your business?
      49. Did you need permission from the state to open your business?
      50. Did Pampered Pooches earn a profit last year? If so, what was the amount? If not, what was the
          amount of the loss?
           Accounting 1 Curriculum   Page 69 of 158


Chapter 2 Test
Answer Section

TRUE/FALSE

      1.   T
      2.   F
      3.   T
      4.   T
      5.   T
      6.   F
      7.   F
      8.   F
      9.   F
     10.   T
     11.   F
     12.   T
     13.   T
     14.   T
     15.   F


MULTIPLE CHOICE

     16.   B
     17.   C
     18.   B
     19.   D
     20.   A
     21.   C
     22.   A
     23.   B
     24.   B
     25.   D
     26.   D


MATCHING

     27.   G
     28.   J
     29.   L
     30.   A
     31.   B
     32.   D
     33.   E
     34.   C
     35.   F
          Accounting 1 Curriculum   Page 70 of 158

    36.   O
    37.   M
    38.   H
    39.   T
    40.   K
    41.   R
    42.   I
    43.   P
    44.   N
    45.   Q
    46.   S


SHORT ANSWER

    47.   A service business
    48.   A partnership
    49.   No
    50.   Yes; $8,060 profit
            Accounting 1 Curriculum                                                            Page 71 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

            Chapter 3 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. After each transaction, the basic accounting equation should remain in balance.
____    2. A business transaction affects at least two accounts.
____    3. "Assets + Liabilities = Owner's Equity" is another way to express the basic accounting equation.
____    4. The increases and decreases caused by business transactions are recorded in specific accounts.
____    5. The free enterprise system is based on the right to own property.
____    6. One of the purposes of accounting is to provide financial information about property and the
           rights to that property.
____    7. The owner's claims to the assets of a business are liabilities.
____    8. A creditor has a financial claim to the assets of a business.
____    9. An account is a record of only the increases in the balance of a specific item such as cash or
           equipment.
____ 10. The total financial claims do not have to equal the total cost of the property.


Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____ 11. If the creditor's financial claim to property totals $1,000 and the owner's financial claim to
         property totals $11,000, the property value is ____.
         a. $10,000                                          c. $12,000
         b. $11,000                                          d. $1,000
____ 12. The account Accounts Receivable is an example of a(n) ____.
         a. asset                                            c. owner's equity
         b. liability                                        d. none of the above
____ 13. All of the following account titles are asset titles except ____ .
         a. Office Furniture                                 c. Cash in Bank
         b. Accounts Payable                                 d. Equipment
____ 14. A business transaction that involves a purchase on account is considered to be a(n) ____.
         a. cash transaction                                 c. investment by the owner
         b. credit transaction                               d. expense transaction
____ 15. Each of the following is a business expense except a payment for ____.
         a. advertising                                      c. utility bills
         b. monthly rent                                     d. equipment
____ 16. The purchase of a desk on account will increase Office Furniture and will also increase ____.
         a. Cash in Bank                                     c. Accounts Receivable
             Accounting 1 Curriculum                                                            Page 72 of 158

         b. Accounts Payable                              d. Marie Krabish, Capital
____ 17. The word equities refers to claims against the assets of a business by ____.
         a. both creditors and owners                     c. owners only
         b. creditors only                                d. customers only
____ 18. If Paul Abdou deposits $30,000 in a checking account in the name of his business, the two
         accounts affected are ____.
         a. Cash in Bank and Computer Equipment           c. Cash in Bank and Paul Abdou, Capital
         b. Cash in Bank and Accounts Receivable          d. Cash in Bank and Accounts Payable


Matching

             Match each item with the correct statement below.
             a. account                                     k.    expenses
             b. accounting equation                         l.    financial claims
             c. accounts payable                            m.    investments
             d. accounts receivable                         n.    liabilities
             e. asset                                       o.    on account
             f. business transaction                        p.    owner's equity
             g. capital                                     q.    property
             h. credit                                      r.    property rights
             i. creditor                                    s.    revenue
             j. equity                                      t.    withdrawal
____   19.   ____ are the prices paid for goods or services used to operate a business.
____   20.   "Assets = Liabilities + Owner's Equity" is called the ____ .
____   21.   Income earned from the sale of goods and services is called ____ .
____   22.   An economic event that causes a change in assets, liabilities, or owner's equity is called a(n) ____
             .
____ 23.       ____ is the amount of money owed to a business's creditors.
____ 24.     The owner's investment in the business is represented by the ____ account.
____ 25.     The total amount of money to be received in the future for goods or services sold on credit is the
             ____ .
____ 26.     Anything of value that is owned or controlled by an individual or a business is called ____ .
____ 27.     The debts of a business are called its ____ .
____ 28.     When an owner takes cash or other assets out of a business for personal use, the transaction is
             called a(n) ____ .
____ 29.     Any property or item of value owned by a business is a(n) ____ .

             Salam Optical is owned by Ali Salam. The transactions below all took place on April 15. Use the
             following codes to describe each transaction.

             a.   Increases an asset and increases a liability
             b.   Increases an asset and decreases an asset
             c.   Decreases an asset and decreases a liability
             d.   Decreases an asset and decreases a liability
             e.   Increases an asset and increases owners equity
____ 30. Salam bought equipment for use in the business with cash, $1,850.
____ 31. Received cash for an eye exam.
____ 32. Paid wages for optical assistants.
           Accounting 1 Curriculum                                                            Page 73 of 158

____ 33. Made a part payment on account for office furniture purchased earlier.
____ 34. Billed a client for replacement eyeglasses.


Problem

      35. Classify the following account titles by identifying the proper classification code.

                                        Codes         Classification
                                         A                Asset
                                          L             Liability
                                         O            Owner's Equity

           1.   Accounts Receivable
           2.   Computer Equipment
           3.   Accounts Payable
           4.   Cash in Bank
           5.   Office Supplies
           6.   Roberta Saba, Capital
           7.   Repair Tools
      36. Every business transaction affects at least two accounts. This keeps the accounting equation in
          balance. What effects do the following transactions have on each of the accounts listed in the
          table. Use a "+" (plus sign) to indicate an increase, a "-" (minus sign) to indicate a decrease, or
          "0" (zero) to indicate no change in the account.

           1.   The owner deposited $60,000 cash in the business bank account.
           2.   Wrote a check to pay the month's rent.
           3.   The owner invested a computer in the business.
           4.   Bought computer equipment on account.
           5.   Received a check from a customer for services.
           6.   The owner withdrew cash for personal use.
           7.   Sold one of the computers on account.
           8.   Paid cash for a microcomputer.

                 Cash in          Accounts           Computer           Accounts         J.R. Boudreau,
                 Bank             Receivable         Equipment          Payable          Capital
           1.
           2.
           3.
           4.
           5.
           6.
           7.
           8.
      37. Tracy Migre, a certified public accountant, has completed the following transactions. Ms. Migre's
          assets, liabilities, and owner's equity account titles and balances are shown in the table. Use the
          table to show the effect of each transaction.
Accounting 1 Curriculum                                                      Page 74 of 158

Transactions:
1. Owner invested additional cash in the business, $5,000.
2. Paid the telephone bill, $600.
3. Wrote a check to a creditor as partial payment on account, $500.
4. Bought supplies on account, $150.
5. Received a check for accounting services, $300.
6. Owner invested office equipment in the business, $2,500.
7. Completed accounting services and agreed to accept payment later, $900.
8. Withdrew cash from the business for personal use, $2,000.
9. Received a check as partial payment on account, $450.

             Cash in      Accounts   Equipment       Supplies    Accounts    T. Migre,
             Bank         Receivable                             Payable     Capital
Beg. Bal.      $5,000        $900      $14,000         $1,500      $3,000     $18,400
1.
New Bal.
2.
New Bal.
3.
New Bal.
4.
New Bal.
5.
New Bal.
6.
New Bal.
7.
New Bal.
8.
New Bal.
9.
New Bal.
           Accounting 1 Curriculum   Page 75 of 158


Chapter 3 Test
Answer Section

TRUE/FALSE

      1.   T
      2.   T
      3.   F
      4.   T
      5.   T
      6.   T
      7.   F
      8.   T
      9.   F
     10.   F


MULTIPLE CHOICE

     11.   C
     12.   A
     13.   B
     14.   B
     15.   D
     16.   B
     17.   A
     18.   C


MATCHING

     19.   K
     20.   B
     21.   S
     22.   F
     23.   C
     24.   G
     25.   D
     26.   Q
     27.   N
     28.   T
     29.   E

     30.   B
     31.   D
     32.   E
     33.   C
     34.   D
       Accounting 1 Curriculum                                           Page 76 of 158



PROBLEM

   35. 1.   A
       2.   A
       3.   L
       4.   A
       5.   A
       6.   O
       7.   A
            3 Cash in   Accounts     Computer       Accounts     J.R. Boudreau,
              Bank      Receivable   Equipment      Payable      Capital
       1.     +         0            0              0            +
       2.     -         0            0              0            -
       3.     0         0            +              0            +
       4.     0         0            +              +            0
       5.     +         0            0              0            +
       6.     -         0            0              0            -
       7.     0         +            -              0            0
       8.     -         0            +              0            0
              37. Cash in    Accounts    Equipment   Supplies Accounts   T. Migre,
                  Bank       Receivable                       Payable    Capital
       Beg. Bal.      $5,000        $900     $14,000   $1,500     $3,000    $18,400
       1.             +5,000                                                 +5,000
       New Bal.      $10,000        $900     $14,000   $1,500     $3,000    $23,400
       2.               -600                                                   -600
       New Bal.       $9,400        $900     $14,000   $1,500     $3,000    $22,800
       3.               -500                                        -500
       New Bal.       $8,900        $900     $14,000   $1,500     $2,500    $22,800
       4.                                               +150       +150
       New Bal.       $8,900        $900     $14,000   $1,650     $2,650    $22,800
       5.               +300                                                  +300
       New Bal.       $9,200        $900     $14,000   $1,650     $2,650    $23,100
       6.                                    +2,5000                         +2,500
       New Bal.       $9,200        $900     $16,500   $1,650     $2,650    $25,600
       7.                          +900                                       +900
       New Bal.       $9,200      $1,800     $16,500   $1,650     $2,650    $26,500
       8.             -2,000                                                 -2,000
       New Bal.       $7,200      $1,800     $16,500   $1,650     $2,650    $24,500
       9.               +450        -450
       New Bal.       $7,650      $1,350     $16,500   $1,650     $2,650    $24,500
            Accounting 1 Curriculum                                                             Page 77 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

            Chapter 4 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. The top of the T account is used for account titles. Credits are entered on the left side of the T;
           debits, on the right.
____    2. Debit and credit rules for accounts on one side of the accounting equation are mirror images of
           those on the other side.
____    3. A credit to an account always increases it; a debit to an account always decreases it.
____    4. An asset account appears on the right side of the accounting equation and is also increased on the
           right side of its T account.
____    5. The payment of a liability is recorded by a debit to the liability account and a credit to the owner's
           capital account.
____    6. Every transaction affects two or more accounts and is recorded by equal amounts of debits and
           credits.
____    7. A business groups its accounts in a ledger.
____    8. A business transaction can affect two accounts on the same side of the accounting equation and
           still leave the equation in balance.
____    9. A chart of accounts is limited to 50 accounts.
____ 10. The difference between the debit and credit amounts in an account is the account balance.


Completion
Complete each sentence or statement.

            Indicate whether each of the following statements should be completed with the word debit or
            credit.

       11. The normal balance for asset accounts is a _______________.
       12. The normal balance for the owner's capital account is a _______________.
       13. An increase in a liability account is recorded as a _______________.
       14. A decrease in an asset account is recorded as a ______________.
       15. A decrease in the owner's capital account is recorded as a _______________.
       16. The normal balance for Accounts Receivable is a _______________.
       17. The normal balance for Accounts Payable is a _______________.
       18. An increase to Office Furniture is a _______________.
             Accounting 1 Curriculum                                                              Page 78 of 158

       19. An increase to Gilberto Ferreira, Capital is a _______________.
       20. A decrease to Accounts Payable is a _______________.


Matching

             Match each item with the correct statement below.
             a. chart of accounts                           e. ledger
             b. credit                                      f. normal balance
             c. debit                                       g. T account
             d. double-entry accounting
____   21.   A(n) ____ is a tool used to analyze a business transaction's effect on an account.
____   22.   The amount entered on the left side of an account is the ____.
____   23.   ____ requires a debit and a credit for each transaction.
____   24.   An account's ____ is always on the increase side of an account.
____   25.   An amount entered on the right side of an account is a(n) ____.
____   26.   The ____ is an "official" list of all the accounts used by a business to record its transactions.


Short Answer

             Listed below are several account titles, each identified by a letter. Following the list of accounts is
             a series of business transactions. Indicate the account to be debited and the account to be credited
             for each transaction.

             A. Cash in Bank                  D. Store Equipment                F. Accounts Payable
             B. Accounts Receivable           E. Office Equipment               G. Melanie Nelson, Capital
             C. Office Supplies

       27. Melanie Nelson deposited $15,000 in cash from personal funds into the business checking
           account.
       28. Melanie Nelson issued a check for $1,750 to buy store equipment.
       29. Melanie Nelson bought a computer for the business on credit from Modern Equipment, Inc., for
           $1,599.
       30. Issued a check for $682 to buy supplies for the office.
       31. Issued a check for $800 to Modern Equipment, Inc., as half payment for the computer.
       32. Sold $65 in office supplies to Hector Ramirez, CPA, on account.
       33. Melanie Nelson invested an additional $3,000 cash in the business.
       34. Received a $65 check from Hector Ramirez, CPA, for office supplies purchased earlier.


Problem

       35. Following a step-by-step method to analyze transactions will help you record them properly. On
           the lines below, list the six steps of business transaction analysis.
           1.
           2.
    Accounting 1 Curriculum                                                            Page 79 of 158

    3.
    4.
    5.
    6.
36. Pat Kwok owns and operates Kwok's Word Processing Service. The accounts used for recording
    and reporting business transactions are:

    Cash in Bank                      Office Equipment                Accounts Payable
    Accounts Receivable               Computer Equipment              Pat Kwok, Capital
    Processing Supplies

    (1)   Prepare a T account for each account used by Kwok's Word Processing Service.
    (2)   Analyze each business transaction; then record the transaction in the appropriate T accounts.
    (3)   After recording all the transactions, compute the balance of each account.
    (4)   In the space following the T accounts, list the asset accounts and their balances.
    (5)   Add the asset account balances.
    (6)   List the liability and owner's equity accounts and their balances.
    (7)   Add the liability and owner's equity account balances.
    (8)   Compare the totals. Are the amounts the same?

    Pat completed these transactions during the first month of operation.
    1. Pat invested $20,000 in the business to begin operations.
    2. Purchased computer equipment for $3,500, Check 101.
    3. Invested computer equipment, valued at $600, in the business.
    4. Bought a used cash register, $975, on account from Downey Equipment, Inc.
    5. Purchased processing supplies for $739, Check 102.
    6. Paid $600 on account to Downey Equipment, Inc., Check 103.
    7. Purchased paper, ribbons, and other processing supplies for $539, on account, from Gillis
        Office Supplies.
    8. Purchased a desk for $495, Check 104.
    9. Paid Gillis Office Supplies $539 on account, Check 105.
           Accounting 1 Curriculum   Page 80 of 158


Chapter 4 Test
Answer Section

TRUE/FALSE

      1.   F
      2.   T
      3.   F
      4.   F
      5.   F
      6.   T
      7.   T
      8.   T
      9.   F
     10.   T


COMPLETION

     11.   debit
     12.   credit
     13.   credit
     14.   credit
     15.   debit
     16.   debit
     17.   credit
     18.   debit
     19.   credit
     20.   debit


MATCHING

     21.   G
     22.   C
     23.   D
     24.   F
     25.   B
     26.   A


SHORT ANSWER

                    Credit
           27.

           Debit
           A        G
                    Credit
         Accounting 1 Curriculum                                                     Page 81 of 158

         28.

         Debit
         D          A
                    Credit
         29.

         Debit
         E          F
                    Credit
         30.

         Debit
         C          A
                    Credit
         31.

         Debit
         F          A
                    Credit
         32.

         Debit
         B          C
                    Credit
         33.

         Debit
         A          G
                    Credit
         34.

         Debit
         A          B


PROBLEM

   35.
       1. Identify the accounts affected.
       2. Classify the accounts affected.
       3. Determine the amount of increase or decrease for each account affected.
       4. Which account is debited? For what amount?
       5. Which account is credited? For what amount?
       6. What is the complete entry in T account form?
   36. Note: Provide 7 T accounts for student use.

         (1) through (3)

                 Cash in Bank                Accounts Receivable                Processing Supplies
Accounting 1 Curriculum                                                          Page 82 of 158

(1) $20,000    (2) $ 3,500                                           (5) $ 739
               (5)     739                                           (7)   539
               (6)     600
               (8)     495
               (9)     539
Bal. $14,127                                                         Bal. $ 1,278


     Office Equipment                  Computer Equipment                 Accounts Payable
(4) $ 975                           (2) $ 3,500                      (6) $ 600     (4) $ 975
(8)    495                          (3)     600                      (9)   539     (7)    539
Bal. $1,470                         Bal. $4,100                                    Bal. $ 375


     Pat Kwok, Capital
            (1) $20,000
            (3)     600
            Bal. $20,600

(4) through (8)
Assets:                                        Liabilities and Owner's Equity:
Cash in Bank                 $ 14,127          Accounts Payable                     $ 375
Accounts Receivable                 0          Pat Kwok, Capital                    _20,600
Processing Supplies             1,278
Office Equipment                1,470
Computer Equipment            __4,100
                                               Total Liabilities
Total Assets                 $ 20,975          and Owner's Equity                   $ 20,975
            Accounting 1 Curriculum                                                           Page 83 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

            Chapter 5 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. Liability, expense, and capital accounts all have normal credit balances.
____    2. Liability, expense, and capital accounts all have normal credit balances.
____    3. The rules of debit and credit for expense accounts are the same as the rules for asset accounts.
____    4. A business should have separate accounts for recording revenue and expenses.
____    5. Liability, revenue, and withdrawal accounts all have normal credit balances.
____    6. The withdrawal of cash by the owner of a business decreases owner's equity.
____    7. Expenses have the opposite effect from revenue on the capital account.
____    8. Temporary capital accounts are extensions of the owner's capital account.
____    9. Permanent accounts start each accounting period with a zero balance.
____ 10. Revenues increase owner's equity, and increases in revenues are recorded as debits.
____ 11. The total of all accounts with normal debit balances should equal the total of all accounts with
         normal credit balances if the rules of debit and credit were followed correctly.
____ 12. Income from Fees is a permanent account.


Completion
Complete each sentence or statement.

            Indicate whether each of the following statements should be completed with the word debit or
            credit.

       13. The normal balance for expense accounts is a _______________.
       14. The normal balance for the owner's withdrawals account is a _______________.
       15. An increase to a revenue account is a _______________.
       16. An increase to the withdrawals account is a _______________.
       17. A decrease to an expense account is a _______________.
       18. The left side of a T account is a _______________.
       19. The normal balance for Consulting Fees is a _______________.
       20. An increase to Utilities Expense is a recorded as a _______________.
       21. An increase to Mark Cookson, Withdrawals is recorded as a _______________.
             Accounting 1 Curriculum                                                              Page 84 of 158

       22. A decrease to Collection Fees is recorded as a _______________.


Matching

             Match each item with the correct statement below.
             a. expenses                                    e. revenue recognition
             b. fees                                        f. temporary capital
             c. permanent                                   g. withdrawal
             d. revenue
____   23.   The costs of doing business are known as ____.
____   24.   The balance of a(n) ____ account does not carry forward to the next accounting period.
____   25.   Money a business earns from the sale of goods or services is the ____.
____   26.   The dollar balance of a(n) ____ account is carried forward from one period to the next.
____   27.   A(n) ____ occurs when the owner takes assets out of the business for personal use.
____   28.   When a business follows the GAAP of ____, revenue is recorded on the date it is earned.


Short Answer

             Terry West, the owner of West Carpet Cleaning Services, was examining the accounting records
             and discovered the following errors.
             A. A $95 payment on account to a creditor was recorded as a debit to Advertising Expense for
                 $95 and a credit to Cash in Bank for $95.
             B. The purchase of a new filing cabinet for $125 cash was recorded as a debit of $125 to
                 Equipment and a credit of $152 to Cash in Bank.

       29. In A, were the correct accounts debited and credited? If not, which account should be debited and
           which account should be credited?
       30. In A, were the debit and credit amounts recorded correctly? If not, what are the correct amounts?
       31. Would the error in A have caused the accounting equation to be out of balance?
       32. In B, were the correct accounts debited and credited? If not, which account should be debited and
           which account should be credited?
       33. In B, were the debit and credit amounts recorded correctly? If not, what are the correct amounts?
       34. Would the error in B have caused the accounting equation to be out of balance?

             Listed below are several account titles, each identified by a letter. Following the list of accounts is
             a series of business transactions. For each transaction, indicate the account to be debited and the
             account to be credited.

             A. Cash in Bank                  E. Accounts Payable               H. Fees
             B. Accounts Receivable           F. D. Orondo, Capital             I. Rent Expense
             C. Office Supplies               G. D. Orondo, Withdrawals         J. Utilities Expense
             D. Office Equipment

       35. Billed A & S Equipment, a customer, $875 for services provided.
       36. Received $925 for services provided to Abruzzi Construction.
          Accounting 1 Curriculum                                                           Page 85 of 158

     37. Bought $175 of office supplies on credit from North Supply, Inc.
     38. Issued a check for $300 to buy office equipment.
     39. Paid by check the $125 monthly heating bill.
     40. Received $550 in cash for services billed earlier to A & S Equipment.
     41. Dale Orondo wrote a check for $200 for personal use.
     42. Issued a check to pay the $800 rent for the month.


Problem

     43. Tran Lee established Lee's Tailoring Service for alterations and tailoring. Lee used the following
         list of accounts for recording and reporting business transactions.

           Cash in Bank                   Sewing Equipment                Tran Lee, Withdrawals
           Accounts Receivable            Accounts Payable                Repair Fees
           Sewing Supplies                Tran Lee, Capital               Rent Expense

          (1) Prepare a T account for each account used by Lee's Tailoring Service.
          (2) Analyze each transaction and record the transaction in the appropriate T accounts.
          (3) After recording all the transactions, compute the balance of each account. Indicate the
                  normal balance by writing "Bal." on the normal balance side of the account.
          (4) On a separate sheet of paper, test for the equality of debits and credits.

          Transactions:
          1. Tran Lee invested $15,000 cash in the business.
          2. Paid $750 rent for the month, Check 101.
          3. Purchased sewing equipment for $1,750, Check 102.
          4. Purchased sewing supplies, $250, on account from Eastern Notions Company.
          5. Received $189 for alterations.
          6. Completed a large tailoring job and received $1,149 for services.
          7. Tran Lee withdrew $200 for personal use, Check 104.
          8. Did tailoring work on account for $256.
          9. Paid $150 on account owed to Eastern Notions Company, Check 103.
           Accounting 1 Curriculum                           Page 86 of 158


Chapter 5 Test
Answer Section

TRUE/FALSE

      1.   F
      2.   T
      3.   T
      4.   T
      5.   F
      6.   T
      7.   T
      8.   T
      9.   F
     10.   F
     11.   T
     12.   F


COMPLETION

     13.   debit
     14.   debit
     15.   credit
     16.   debit
     17.   credit
     18.   debit
     19.   credit
     20.   debit
     21.   credit
     22.   debit


MATCHING

     23.   A
     24.   F
     25.   D
     26.   C
     27.   G
     28.   E


SHORT ANSWER

     29.   No; debit Accounts Payable, credit Cash in Bank
     30.   Yes
     31.   No
     32.   Yes
    Accounting 1 Curriculum                                      Page 87 of 158

33. No; debit Equipment for $125, credit Cash in Bank for $125
34. Yes
               Credit
    35.

    Debit
    B           F
            3    Credit
    6.
            D
    ebit
    A            H
                Credit
    37.

    Debit
    C           E
                Credit
    38.

    Debit
    D           A
                Credit
    39.

    Debit
    J           A
                Credit
    40.

    Debit
    A           B
                Credit
    41.

    Debit
    G           A
                Credit
    42.

    Debit
    I           A
       Accounting 1 Curriculum                                                          Page 88 of 158

PROBLEM

   43. (1) through (3) Note: Provide 9 T accounts for student use.

                 Cash in Bank                  Accounts Receivable                    Sewing Supplies
          (1) $15,000 (2) $ 750             (8) $ 256                         (4) $     250
          (5)      189 (3)    1,750
          (6)    1,149 (7)      200         Bal. $ 156                        Bal.      250
                         (9)    150
          Bal. $13,488

           Sewing Equipment                         Accounts Payable                   Tran Lee, Capital
       (3) $ 1,750                          (9) $     150 (4) $      250                        (1) $15,000

       Bal. $ 1,750                                         Bal. $   100                         Bal. $15,000

         Tran Lee, Withdrawals                       Repair Fees                        Rent Expense
       (7) $   200                                        (5) $    189         (2) $     750
                                                          (6)    1,149
                                                          (8)      256
                                                          Bal. $ 1,594

       (4)
                                      Debit Balances                            Credit Balances
       Cash in Bank                     $ 13,488          Accounts Payable                $ 100
       Accounts Receivable                    256         Tran Lee, Capital                 15,000
       Sewing Supplies                        250         Repair Fees                        1,594
       Sewing Equipment                     1,750
       Tran Lee, Withdrawals                  200
       Rent Expense                           750
                                        $ 16,694                                              $ 16,694
            Accounting 1 Curriculum                                                            Page 89 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

                                              Chapter 6 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. A fiscal period may be one month, three months, six months, or even one year, but usually it is
           one year.
____    2. An accounting period that begins on July 1 and ends on June 30 is a calendar-year accounting
           period.
____    3. To record transactions in chronological order means to record them according to the date on
           which they occurred.
____    4. A journal is like a diary of a business because it is the only place where complete details of a
           transaction are recorded.
____    5. For every transaction recorded in the general journal, these items are always written: date,
           account titles, amounts, and source document or brief explanation.
____    6. If an error is discovered immediately after journalizing, a single ruling should be placed through
           the incorrect data and the correct information should be written above it.
____    7. Recording transactions is the second step in the accounting cycle.
____    8. To verify a source document means to check the accuracy of the information on it.
____    9. Since the debit and credit amounts in a business transaction are the same, the order in which the
           account titles are recorded in the general journal does not matter.
____ 10. Dollar signs, commas, and decimals are not used when entering amounts in the journal.
____ 11. The title of the account to be credited is indented from the left edge of the Description column so
         it can be easily distinguished from the debit part of the transaction.
____ 12. Never erase an error in a journal entry because an erasure looks suspicious.
____ 13. In order to help an owner/manager know the financial condition of a business, accounting records
         are kept and reported for a certain period of time called an accounting period.
____ 14. The type of source document prepared depends upon the nature of the transaction.


Matching

            Match each item with the correct statement below.
            a. accounting cycle                            g.    journal
            b. calendar year                               h.    journalizing
            c. check stub                                  i.    memorandum
            d. fiscal year                                 j.    receipt
            e. general journal                             k.    source document
            f. invoice
           Accounting 1 Curriculum                                                          Page 90 of 158


____ 15. A(n) ____ is an accounting period of twelve months ending on the last day of any month except
         December.
____ 16. A(n) ____ is often called a book of original entry.
____ 17. The ____ is an all-purpose journal used for recording business transactions.
____ 18. The various activities a business completes to organize its accounting records in an orderly
         fashion is called the ____.
____ 19. A(n) ____ is any type of business paper that verifies that a transaction occurred.
____ 20. Another term used for "recording" a business transaction is ____.
____ 21. A(n) ____ accounting period begins on January 1 and ends on December 31.


Short Answer

           Several transactions of Hanson Pool Service are described below. Indicate the type of source
           document that is likely to contain the details of each transaction.

      22. Purchased $500 worth of chemicals on account from Campbell Chemical Co.
      23. Received cash from a customer on account, $120.
      24. Purchased a new generator for use in the business, paying $550 cash.
      25. Paid the current month's electric bill of $95.
      26. Billed customers for pool services performed during the past week, $2,300.
      27. Invested a used truck in the business; the truck is valued at $3,000.
      28. Made a $250 payment on account to Campbell Chemical Co.


Problem

      29. Shown below are the steps followed in recording a business transaction in a journal. Place these
          activities in their proper order. Use 1 for the first step and 6 for the last step.

           1. Record the amount of the debit.
           2. Record the amount of the credit.
           3. Record the title of the account to be credited, indented from the left edge of
              the Description column.
           4. Write a brief reference to the source document or a description of the entry in
              the Description column, indented from the title of the account credited.
           5. Enter the date of the transaction in the Date column.
           6. Record the title of the account to be debited.
      30. Ruth Abrams, a physical therapist, is the owner/operator of Abrams Health Center. Below is a
          partial listing of the accounts used in the business.

           A.   Cash in Bank                                E.   Accts. Pay.—Metro Suppliers
           B.   Accts. Rec.—Bret Hagen                      F.   Ruth Abrams, Capital
           C.   Office Equipment                            G.   Ruth Abrams, Withdrawals
           D.   Medical Equipment                           H.   Professional Fees
                                                            I.   Advertising Expense
     Accounting 1 Curriculum                                                           Page 91 of 158

     Use the form that follows. For each transaction,
     (1) Determine which accounts are debited and credited, and place the letter assigned to those
         accounts in the Acct. Title columns.
     (2) Indicate the account classification by placing A for asset, L for liability, OE for owner's
         equity, R for revenue, and E for expense in the Acct. Class. columns.
     (3) Indicate whether the account is to be increased or decreased by placing a plus sign (+) for
         increase and a minus sign (-) for decrease in the Incr./Decr. columns.

     Transactions:
     1. Ruth Abrams invested $5,000 in the business.
     2. Received $520 for professional services completed for a client.
     3. Received $60 from a patient, Bret Hagen, to apply on account.
     4. Purchased therapy equipment on account from Metro Suppliers, $1,800.
     5. Ruth Abrams withdrew $400 in cash for personal use.
     6. Wrote a check for $75 in payment to the Daily News for the weekly advertisement.
     7. Ruth Abrams donated an old file cabinet, valued at $75, to the business.
     8. Paid Metro Suppliers $500 on account.

                             Account Debited                              Account Credited
      Trans.       Acct.          Acct.        Incr./            Acct.         Acct.        Incr./
       No.         Title          Class.       Decr.             Title         Class.        Decr.
        1       _________      _________    _________         _________     _________     _________
        2       _________      _________    _________         _________     _________     _________
        3       _________      _________    _________         _________     _________     _________
        4       _________      _________    _________         _________     _________     _________
        5       _________      _________    _________         _________     _________     _________
        6       _________      _________    _________         _________     _________     _________
        7       _________      _________    _________         _________     _________     _________
        8       _________      _________    _________         _________     _________     _________
31. Below is a partial listing of the accounts used by Macy Landscaping. Record the following
    business transactions on page 2 of the general journal using the current year.

     Cash in Bank                            Bill Macy, Capital           Rent Expense
     Accounts Receivable—Peggy Dunne         Bill Macy, Withdrawals       Supplies Expense
     Supplies                                Fees

     Transactions:
     Nov. 1     Issued Check 101 for $900 in payment of the monthly rent.
           5    Received a check for $200 from a charge customer, Peggy Dunne, on account,
                Receipt 30.
           7    The owner, Bill Macy, withdrew from the business $20 in supplies for personal
                use, Memorandum 15.
           Accounting 1 Curriculum   Page 92 of 158


Chapter 6 Test
Answer Section

TRUE/FALSE

      1.   T
      2.   F
      3.   T
      4.   T
      5.   F
      6.   T
      7.   F
      8.   T
      9.   F
     10.   T
     11.   T
     12.   T
     13.   T
     14.   T


MATCHING

     15.   D
     16.   G
     17.   E
     18.   A
     19.   K
     20.   H
     21.   B


SHORT ANSWER

     22.   Invoice
     23.   Receipt
     24.   Check stub
     25.   Check stub
     26.   Invoice
     27.   Memorandum
     28.   Check stub


PROBLEM

     29. 1. 3           4. 6
         2. 5           5. 1
         3. 4           6. 2
     30.
     Accounting 1 Curriculum                                                        Page 93 of 158

                          Account Debited                                 Account Credited
     Trans.       Acct.          Acct.           Incr./           Acct.        Acct.         Incr./
      No.         Title          Class.           Decr.           Title        Class.        Decr.
       1            A              A                +               F           OE             +
       2            A              A                +               H            R             +
       3            A              A                +               B            A             -
       4            A              A                +               E            L             +
       5            G             0E               +                A            A             -
       6            I              E               +                A            A             -
       7            C              A                +               F           OE             +
       8            E              L                -               A            A             -
31. Note: Provide a general journal with at least 10 lines for student use.

                                 GENERAL JOURNAL                                              Page 2
       Date                                                                     Debit         Credit
     20—
     Nov.     1 Rent Expense                                                    900.00
                     Cash in Bank                                                             900.00
                           Check 101
              5 Cash in Bank                                                   200.00
                     Accounts Receivable – Peggy Dunne                                        200.00
                           Receipt 30
              7 Bill Macy, Withdrawals                                           20.00
                     Supplies                                                                  20.00
                           Memorandum 15
            Accounting 1 Curriculum                                                             Page 94 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

            Chapter 7 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. The purpose of posting is to show the changes that take place in the business's accounts as a result
           of financial transactions.
____    2. The ledger account form used by Roadrunner Delivery Service is a three-column account form.
____    3. Opening an account in a ledger involves writing the account title and the account number on the
           account form.
____    4. Opening an account in a computerized accounting system is entirely different from opening an
           account in a manual system.
____    5. How often posting occurs depends on the size of the business, the number of transactions, and
           whether posting is done manually or electronically.
____    6. The easiest way to post is from left to right in a ledger account because there is less chance of
           omitting data.
____    7. Every posting requires the year, month, and day to be entered in the Date column of the ledger
           account for every transaction.
____    8. Every amount posted will either increase or decrease the balance of a ledger account.
____    9. The notation "G3" in the Posting Reference column of a ledger account indicates the data was
           posted from general journal page 3.
____ 10. Every journal entry requires a posting to at least two ledger accounts.
____ 11. A credit posting to the Office Equipment account will result in an increase to that account.
____ 12. In the preparation of a trial balance, all accounts are listed in the order in which they appear on
         the chart of accounts, including those accounts with a zero balance.
____ 13. An error discovered before posting is usually corrected with a journal entry.
____ 14. To locate a trial balance error, the first step is to check the postings from the journal to the
         individual ledger accounts.
____ 15. When posting a correcting entry, the phrase "correcting entry" is usually written in the
         Explanation column of the ledger account.
____ 16. If a transaction is journalized on the 8th and is posted on the 10th, the date entered in the Date
         column of the ledger account is the 10th.
____ 17. A trial balance is prepared after posting is completed.
             Accounting 1 Curriculum                                                              Page 95 of 158

Matching

             Match each item with the correct statement below.
             a. correcting entry                            f.     proving the ledger
             b. general ledger                              g.     slide
             c. ledger                                      h.     transposition error
             d. ledger account form                         i.     trial balance
             e. posting
____   18.   If you were to write $190 as either $19 or $1,900, this mistake would be called a(n) ____.
____   19.   Errors discovered after posting has taken place require a(n) ____.
____   20.   Transferring data from the journal to the ledger is called ____.
____   21.   A periodic report prepared by a business to test the equality of total debits and total credits in the
             ledger is called a(n) ____.
____ 22.     If you meant to write $27 but wrote $72, this mistake is called a(n) ____.
____ 23.     The accounts used by a business can be kept on pages or cards, which are kept together in a book
             or file called a(n) ____.
____ 24.     Adding all the debit balances and all the credit balances and then comparing the two totals to see
             whether they are equal is called ____.
____ 25.     The accounting stationery used to record financial information about specific accounts is a(n)
             ____.
____ 26.     Whether accounts are kept manually in a special file or electronically on magnetic disks or tapes,
             the ledger is often called a(n) ____.


Problem

       27. Shown below are the steps used in posting a business transaction from the journal to the general
           ledger accounts. Renumber these steps in their proper order, using 1 for the first step and 5 for
           the last step.

             1. Write G for general journal and the journal page number in the Posting
                Reference column of the ledger account.
             2. Write the ledger account number in the Posting Reference column of the
                journal.
             3. Compute and record the new account balance.
             4. Write the date of the journal entry in the Date column of the ledger account.
             5. Enter the debit or credit amount of the transaction in the appropriate column
                of the ledger account.
       28. Shown below are the accounts for Norris Billing Services. Prepare a trial balance as of December
           31 of the current year.

                 Cash in Bank                                          $3,340.00
                 Accounts Receivable—Aaronson's                           715.00
                 Computer Equipment                                     4,500.00
                 Accounts Payable-Modern Office Equipment                 920.00
                 Elena Norris, Capital                                  6,865.00
                 Elena Norris, Withdrawals                                550.00
                 Income Summary                                               —
                 Professional Fees                                      2,300.00
                 Advertising Expense                                       90.00
     Accounting 1 Curriculum                                                            Page 96 of 158

          Rent Expense                                           600.00
          Supplies Expense                                       150.00
          Utilities Expense                                      140.00
29. When the trial balance for Northeast Pest Control Services did not balance, Paul Michaels, the
    accounting clerk, reviewed the accounting records and found the errors listed below.
    Using the table that follows, indicate whether each of the following errors (1) affects the totals of
    the trial balance and (2) requires a correcting entry. Write Yes or No in the appropriate columns.

     1.   The balance of Cash in Bank was incorrectly calculated and understated by $200.
     2.   A $200 credit to Service Fees in the general journal was posted as $2,000.
     3.   A check for $400 received from a charge customer was not journalized.
     4.   A $210 payment for the electric bill was credited to Cash in Bank as $120.
     5.   A $100 check received from a customer was journalized as a debit to Cash in Bank but was
          not posted to the Cash in Bank account.

               Does Error Affect              Is a Correcting
      Error    the Trial Balance?             Entry Required?
        1
        2
        3
        4
        5
           Accounting 1 Curriculum   Page 97 of 158


Chapter 7 Test
Answer Section

TRUE/FALSE

      1.   T
      2.   F
      3.   T
      4.   F
      5.   T
      6.   T
      7.   F
      8.   T
      9.   T
     10.   T
     11.   F
     12.   T
     13.   F
     14.   F
     15.   T
     16.   F
     17.   T


MATCHING

     18.   G
     19.   A
     20.   E
     21.   I
     22.   H
     23.   C
     24.   F
     25.   D
     26.   B


PROBLEM

     27. 1. 2          4. 1
         2. 5          5. 3
         3. 4
            Accounting 1 Curriculum                                                  Page 98 of 158

28.Note: Provide a 2-column accounting form for student use.

                                               Norris Billing Services
                                                   Trial Balance
                                                December 31, 20—
            Cash in Bank                                                  3,340.00
            Accounts Receivable—Aaronson's                                  715.00
            Computer Equipment                                            4,500.00
            Accounts Payable—Modern Office Equipment                                         920.00
            Elena Norris, Capital                                                          6,865.00
            Elena Norris, Withdrawals                                      550.00
            Income Summary                                                     —                 —
            Professional Fees                                                              2,300.00
            Advertising Expense                                              90.00
            Rent Expense                                                    600.00
            Supplies Expense                                                150.00
            Utilities Expense                                               140.00        ________
                     Totals                                              10,085.00        10,085.00
      29.
                      Does Error Affect             Is a Correcting
            Error     the Trial Balance?           Entry Required?
              1              Yes                          No
              2              Yes                          No
              3               No                          No
              4              Yes                          Yes
              5              Yes                          No
            Accounting 1 Curriculum                                                          Page 99 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

            Chapter 8 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. A work sheet is prepared at the end of each fiscal period.
____    2. The work sheet is a working paper and is prepared in pen.
____    3. Account titles are listed on the work sheet in alphabetical order.
____    4. A double rule under a column of figures means that the figures are to be added or subtracted.
____    5. A net income for the period is the amount left after the expenses for the period have been
           subtracted from revenue.
____    6. All asset accounts are extended to the Balance Sheet section.
____    7. Preparing the work sheet is the sixth step in the accounting cycle.
____    8. Amounts from the Trial Balance section are extended first to the Income Statement section.
____    9. A single rule across both amount columns of the Trial Balance section means that no more entries
           will be made.
____ 10. A net loss decreases the balance in the owner's capital account.
____ 11. After the net loss is calculated, it should be reflected in the debit column of the Income Statement
         section and the credit column of the Balance Sheet section.
____ 12. Total expenses for the period are reflected in the total of the credit column of the Income
         Statement section.
____ 13. The Trial Balance section contains entries for all accounts in the general ledger including those
         with zero balances.
____ 14. A work sheet always covers a period of one month.
____ 15. All liability accounts are listed in the credit column of the Income Statement section.


Matching

            Match each item with the correct statement below.
            a. Balance Sheet section                       h.    matching principle
            b. capital                                     i.    net income
            c. credit                                      j.    net loss
            d. debit                                       k.    ruling
            e. extending                                   l.    trial balance
            f. heading                                     m.    work sheet
            g. Income Statement section
             Accounting 1 Curriculum                                                           Page 100 of 158

____   16.   A(n) ____ results when revenue is larger than expenses.
____   17.   The asset, liability, and owner's equity accounts are extended to the ____ of the work sheet.
____   18.   ____ means drawing a line under a column of amounts.
____   19.   A net loss is entered in the ____ column of the Income Statement section of the work sheet.
____   20.   Revenue and expense accounts are listed in the Trial Balance section of the work sheet and in the
             ____ of the work sheet.
____ 21.     The ____ allows a business to match revenue against expenses as a means of measuring profit for
             the period.
____ 22.     A(n) ____ is a paper used to collect information from the general ledger accounts.
____ 23.     The first two columns on the work sheet are used to enter the ____.
____ 24.     If there is a net loss for the period, it is entered in the ____ column of the Balance Sheet section
             of the work sheet.
____ 25.     ____ is transferring balances from the Trial Balance section of the work sheet to either the
             Balance Sheet section or the Income Statement section.
____ 26.     If the total of the credit column of the Income Statement section is less than the debit column,
             there is a(n) ____ for the period.
____ 27.     The amount of net income for the period is added to the Balance Sheet credit total because it
             increases the balance in the ____ account.
____ 28.     The ____ of the work sheet answers the questions "who?", "what?", and "when?".


Short Answer

             The trial balance section of the work sheet for Top Hat Chimney Service for the month ended
             October 31 appears below. Based on the information presented, answer the questions that follow.

              Acct.                                                          Trial Balance
               No.                   Account Name                         Debit         Credit
              101      Cash in Bank                                        1,298.00
              105      Accts. Rec.—Holden Enterprises                      1,650.00
              108      Accts. Rec.—Louise Wright                             220.00
              110      Cleaning Equipment                                  3,864.00
              115      Office Equipment                                    2,990.00
              120      Truck                                               9,000.00
              201      Accts. Pay.—Jared Equip. Co.                                        872.00
              205      Accts. Pay.—Haroun Motors                                         2,120.00
              301      Timothy Orr, Capital                                            14,567.00
              302      Timothy Orr, Withdrawals                              600.00
              303      Income Summary                                            —             —
              401      Cleaning Fees                                                     3,395.00
              501      Advertising Expense                                   260.00
              501      Advertising Expense                                   260.00
              505      Maintenance Expense                                   277.00
              510      Miscellaneous Expense                                  20.00
              515      Rent Expense                                          600.00
              520      Utilities Expense                                     175.00
          Accounting 1 Curriculum                                                           Page 101 of 158

     29. What question should the third line of the heading for this work sheet answer? How would the
         third line be worded?
     30. Should a single rule or a double rule be drawn across the Trial Balance section under the last
         amount shown?
     31. Is the trial balance in balance? If yes, what is the amount of the totals? If no, what is the amount
         of the difference?
     32. The ending balances of the Advertising Expense and Maintenance Expense were inadvertently
         transposed when they were transferred to the work sheet. Would this error have any effect on the
         trial balance?
     33. Did Top Hat Chimney Service have a net income or net loss for the month? What was the amount
         of the net income or net loss?


Problem

     34. The general ledger accounts and their ending balances for the Greenleaf Appliance Repair Center
         are listed below. Complete the work sheet for the month ended September 30.

          101     Cash in Bank                                                            $ 4,396.59
          105     Accounts Receivable—Susan Jenny                                             845.43
          110     Accounts Receivable—Bill Ritzmann                                           298.32
          115     Office Equipment                                                          6,485.50
          120     Repair Equipment                                                         10,540.38
          205     Accounts Payable—Hanover Supply                                           3,485.34
          210     Accounts Payable—Price Co.                                                1,294.07
          301     J. D. Greenleaf, Capital                                                 14,455.83
          302     J. D. Greenleaf, Withdrawals                                                800.00
          401     Repair Fees                                                               9,506.54
          501     Advertising Expense                                                       1,350.00
          505     Miscellaneous Expense                                                       507.58
          510     Rent Expense                                                              1,900.00
          515     Repair Expense                                                              934.49
          520     Utilities Expense                                                           683.49
           Accounting 1 Curriculum                        Page 102 of 158


Chapter 8 Test
Answer Section

TRUE/FALSE

      1.   T
      2.   F
      3.   F
      4.   F
      5.   T
      6.   T
      7.   T
      8.   F
      9.   F
     10.   T
     11.   F
     12.   F
     13.   T
     14.   F
     15.   F


MATCHING

     16.   I
     17.   A
     18.   K
     19.   C
     20.   G
     21.   H
     22.   M
     23.   L
     24.   D
     25.   E
     26.   J
     27.   B
     28.   F


SHORT ANSWER

     29.   "When?": For the Month Ended October 31, 20—
     30.   Single
     31.   Yes, $20,954
     32.   No
     33.   Net income of $2,063.00
       Accounting 1 Curriculum                                                          Page 103 of 158

PROBLEM

   34. Note: Provide a 6-column work sheet for student use.

                                              Greenleaf Appliance Repair Center
                                                         Work Sheet
                                           For the Month Ended September 30, 20—

        Acct.                                   Trial Balance         Income Statement         Balance Sheet
        No.            Explanation              Debit    Credit        Debit    Credit       Debit        Credit
        101     Cash in Bank                   4,396.59                                      4,396.59
        105     Accts. Rec.—Susan                845.43                                        845.43
                   Jenny
          110   Accts. Rec.—Bill                 298.32                                       298.32
                  Ritzmann
          115   Office Equipment               6,485.50                                      6,485.50
          120   Repair Equipment              10,540.38                                     10,540.38
          205   Accts.Pay.—Hanover                         3,485.34                                        3,485.34
                  Supply
          210   Accts. Pay.— Price Co.                     1,294.07                                        1,294.07
          301   J. D. Greenleaf, Capital                  14,455.83                                       14,455.83
          302   J. D. Greenleaf,                 800.00                                       800.00
                 Withdrawals
          303   Income Summary                      —            —         —           —
          401   Repair Fees                                9,506.54              9,506.54
          501   Advertising Expense            1,350.00               1,350.00
          505   Miscellaneous Expense            507.58                 507.58
          510   Rent Expense                   1,900.00               1,900.00
          515   Repair Expense                   934.49                 934.49
          520   Utilities Expense                683.49                 683.49
                                              28,741.78   28,741.78   5,375.56   9,506.54   23,366.22     19,235.24
                Net Income                                            4,130.98                             4,130.98
                                                                      9,506.54   9,506.54   23,366.22     23,366.22
            Accounting 1 Curriculum                                                         Page 104 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

            Chapter 9 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. The balance sheet reports the final balances of the permanent accounts at the end of the fiscal
           period.
____    2. The balance sheet is prepared before the statement of changes in owner's equity.
____    3. Financial reports are often prepared in pencil.
____    4. The income statement represents the basic accounting equation.
____    5. A net income will increase the owner's capital account.
____    6. The heading is the same on all three financial statements.
____    7. The revenue, expense, and the Income Summary accounts are included on the statement of
           changes in owner's equity.
____    8. The information on the statement of changes in owner's equity is used in preparing the income
           statement.
____    9. Net income or net loss is the difference between total revenue and total expenses over a specific
           period of time.
____ 10. The statement of changes in owner's equity summarizes the effects on the capital account of the
         various business transactions that occurred during the period.
____ 11. Return on sales is calculated by dividing net sales by net income.
____ 12. The primary financial statements prepared for a sole proprietorship are the income statement and
         the balance sheet.
____ 13. The first amount column on the income statement is used to record revenue and the second
         amount column is used to record expenses.
____ 14. The Trial Balance section of the work sheet provides the information used in preparing the
         income statement.
____ 15. The net income or net loss reported on the income statement must be the same as the net income
         or net loss calculated on the work sheet.
____ 16. The changes in the Cash in Bank account are reported in the statement of changes in owner's
         equity.
            Accounting 1 Curriculum                                                        Page 105 of 158


Matching

            Match each item with the correct statement below.
            a. balance sheet                               j.   net income or net loss
            b. Balance Sheet section of the work sheet     k.   on a specific date
            c. current assets                              l.   profitability ratio
            d. current liabilities                         m.   quick ratio
            e. current ratio                               n.   ratio analysis
            f. financial statements                        o.   report form
            g. income statement                            p.   return on sales
            h. Income Statement section of the work        q.   statement of changes in owner's equity
               sheet
            i. liquidity ratio
____ 17. The balance sheet reports financial information ____.
____ 18. The information needed to prepare the income statement comes from the___.
____ 19. ____ summarize the changes resulting from business transactions that have occurred during an
         accounting period.
____ 20. ____ is a comparison of two items on a financial statement, resulting in a percentage that is used
         to evaluate the relationship between the two items.
____ 21. ____ is reported on the income statement.
____ 22. A(n) ____ is the financial statement that reports the final balances in all asset, liability, and
         owner's equity accounts at the end of the accounting period.
____ 23. In the ____, the classifications of balance sheet accounts are shown one under the other.
____ 24. One source of information for completing the balance sheet is the ____.
____ 25. The ____ is completed as a support document for the balance sheet.
____ 26. The ____ reports a business's net income or net loss over an entire accounting period.
____ 27. ____ indicates what percentage of net sales represents profit.


Short Answer

            The following information was taken from the work sheet of Graff Home Repairs. Use the
            information to answer the questions below.

               Total           Total
               Assets        Liabilities      Capital      Withdrawals        Revenue        Expenses

               $34,819         $2,499         $32,000           $1,000         $3,230         $1,910

      28. What is the amount of the net income or net loss for the period?
      29. During the period, the owner invested an additional $9,000 in the business. What was the balance
          of the capital account at the beginning of the period?
      30. What was the balance of the capital account at the end of the period?
      31. On which statement or statements will the net income (or net loss) amount appear?
      32. What is the return on sales for the period?
          Accounting 1 Curriculum                                                       Page 106 of 158


Problem

     33. Indicate in the table below the financial statement on which each of the following accounts
         appear.
                                                Financial Statements
                                                                  Statement of
                                              Income               Changes in               Balance
                     Account                 Statement           Owner's Equity               Sheet
         1. Cash in Bank                  ___________            ____________            ___________
         2. Utilities Expense             ___________            ____________            ___________
         3. Accounts Payable              ___________            ____________            ___________
         4. Commissions                   ___________            ____________            ___________
         5. Capital                       ___________            ____________            ___________
         6. Withdrawals                   ___________            ____________            ___________


     34. The following amounts appeared on the work sheet of Emmett Tree Service for the month ended
         June 30.

                                                Income Statement              Balance Sheet
                                                 Debit       Credit           Debit        Credit
          Cash in Bank                                                     3,814.61
          Accts. Rec. – Marge Balzotti                                       382.97
          Accts. Rec. – Malik Gaines                                         521.46
          Office Equipment                                                 2,930.65
          Tools                                                            4,186.50
          Accts. Pay. – Cardenes Corp.                                                   1,607.52
          Accts. Pay. – Woods Tools, Inc.                                                2,708.39
          James Emmett, Capital                                                          6,152.45
          James Emmett, Withdrawals                                          400.00
          Income Summary                            —              —
          Service Fees                                       3,408.91
          Advertising Expense                   655.00
          Maintenance Expense                   175.43
          Rent Expense                          750.00
          Utilities Expense                     132.65       _______      ________        ________
                                              1,713.08       3,408.91     12,236.19       10,540.36
          Net Income                          1,695.83       _______      ________         1,695.83
                                              3,408.91       3,408.91     12,236.19       12,236.19

          A. Prepare an income statement for Emmett Tree Service.

          B. Prepare a balance sheet in the report form for Emmett Tree Service. The beginning capital
             balance is $6,152.45.
           Accounting 1 Curriculum                                    Page 107 of 158


Chapter 9 Test
Answer Section

TRUE/FALSE

      1.   T
      2.   F
      3.   F
      4.   F
      5.   T
      6.   F
      7.   F
      8.   F
      9.   T
     10.   T
     11.   F
     12.   T
     13.   F
     14.   F
     15.   T
     16.   F


MATCHING

     17.   K
     18.   H
     19.   F
     20.   N
     21.   J
     22.   A
     23.   O
     24.   B
     25.   Q
     26.   G
     27.   P


SHORT ANSWER

     28.   Net income of $1,320
     29.   $23,000
     30.   $32,320
     31.   Income statement, statement of changes in owner's equity
     32.   40.87 percent ($1,320 ÷ $3,230)



PROBLEM
      Accounting 1 Curriculum                                             Page 108 of 158


33.
    1.   Balance sheet
    2.   Income statement
    3.   Balance sheet
    4.   Income statement
    5.   Statement of changes in owner's equity, balance sheet
    6.   Statement of changes in owner's equity
34. A.   Note: Provide a 2-column accounting form for student use.

                                              Emmett Tree Service
                                                Income Statement
                                       For the Month Ended June 30, 20—
      Revenue:
          Service Fees                                                                  3,408.91
      Expenses:
          Advertising Expense                                                655.00
          Maintenance Expense                                                175.43
          Rent Expense                                                       750.00
          Utilities Expense                                                  132.65
              Total Expenses                                                            1,713.08
      Net Income                                                                        1,695.83

      B. Note: Provide a 2-column accounting form for student use.

                                                 Emmett Tree Service
                                                   Balance Sheet
                                                   June 30, 20—
                                   Assets
      Cash in Bank                                                        3,814.61
      Accounts Receivable – Marge Balzotti                                  382.97
      Accounts Receivable – Malik Gaines                                    521.46
      Office Equipment                                                    2,930.65
      Tools                                                               4,186.50
          Total Assets                                                                 11,836.19

                                 Liabilities
      Accounts Payable – Cardenes Corp.                                   1,607.52
      Accounts Payable – Woods Tools, Inc.                                2,780.39
         Total Liabilities                                                              4,387.91

                                Owner's Equity
      James Emmett, Capital                                                             7,448.28
         Total Liabilities and Owner's Equity                                          11,836.19
            Accounting 1 Curriculum                                                            Page 109 of 158


                            Norman Thomas High School for Commercial Education
                                               Steve Satin, Principal (I.A.)
                                  Department of Business, Foreign Languages and the Arts
                                          Gilberto Vega, Assistant Principal

            Chapter 10 Test

True/False
Indicate whether the sentence or statement is true or false.

____    1. Revenue and expense accounts must be closed out because their balances apply to only one
           accounting period.
____    2. Closing entries transfer the net income or net loss to the withdrawals account.
____    3. To close a revenue account, debit it for the amount of its credit balance.
____    4. When expense accounts are closed, the Income Summary account is credited.
____    5. Before closing entries are journalized and posted, the Income Summary account in the general
           ledger has a normal credit balance.
____    6. The Income Summary account is a simple income statement in the ledger.
____    7. After the closing entries have been posted, the balance in the capital account reflects the net
           income or net loss and the withdrawals for the period.
____    8. The Income Summary account is located in the owner's equity section of the general ledger.
____    9. Closing the revenue account is the second closing entry.
____ 10. If a business reports a net loss for the period, the journal entry to close the Income Summary
         account would be a debit to capital and a credit to Income Summary.
____ 11. The last step in the accounting cycle is the preparation of the post-closing trial balance.
____ 12. To close the withdrawals account, the amount of its balance is debited to the capital account and
         credited to the withdrawals account.


Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____ 13. Which of the following accounts is not closed at the end of the accounting period?
         a. Fees                                        c. Maintenance Expense
         b. Income Summary                              d. Klaus Braun, Capital
____ 14. Transferring the expense account balances to the Income Summary account is the ____.
         a. first closing entry                         c. third closing entry
         b. second closing entry                        d. fourth closing entry
____ 15. Accounts that start each new accounting period with zero balances are ____.
         a. permanent accounts                          c. liability accounts
         b. asset accounts                              d. temporary accounts
____ 16. Which of the following statements is true?
         a. The Income Summary account is located in the owner's equity section of the general
            ledger.
         b. The Income Summary account has a normal debit balance.
            Accounting 1 Curriculum                                                         Page 110 of 158

         c. The Income Summary account is a permanent account.
         d. The Income Summary account is used throughout the accounting period.
____ 17. The balance of the revenue account is transferred to the ____.
         a. debit side of the Cash in Bank account
         b. credit side of the owner's capital account
         c. credit side of the Income Summary account
         d. debit side of the owner's withdrawals account
____ 18. If a business has a net income for the period, the journal entry to close the balance of the Income
         Summary account is ____.
         a. a debit to owner's capital, a credit to Income Summary
         b. a debit to Fees, a credit to owner's capital
         c. a debit to Income Summary, a credit to owner's capital
         d. a debit to owner's capital, a credit to Fees.
____ 19. Closing entries are used to transfer the net income or net loss for the accounting period to the
         ____.
         a. Cash in Bank account                           c. revenue account
         b. expense accounts                               d. capital account


Matching

            Match each item with the correct statement below.
            a. closing entries                             d. permanent accounts
            b. compound entry                              e. post-closing trial balance
            c. Income Summary account                      f. temporary capital accounts
____ 20. Accounts that start an accounting period with zero balances are called ____.
____ 21. A(n) ____ is a journal entry with two or more debits or two or more credits.
____ 22. The ____ is a general ledger account used to accumulate and summarize the revenue and
         expenses for a period.
____ 23. Only ____ and their balances are listed on the post-closing trial balance.
____ 24. A(n) ____ is prepared to prove that debits in the ledger accounts are equal to the credits after the
         closing entries have been posted.
____ 25. ____ are made to close out or reduce to zero the balance of certain general ledger accounts.


Short Answer

            The following amounts appear on the work sheet for West Side Cleaners. Use the information to
            answer the following questions.

                  Cash in Bank                            $3,482.00
                  Accounts Receivable                        800.00
                  Supplies                                   903.00
                  Equipment                                4,236.00
                  Accounts Payable                         2,673.00
                  James Brown, Capital                     7,926.00
                  James Brown, Withdrawals                 1,130.00
                  Income Summary                                 —
                  Cleaning Fees                            3,890.00
                  Maintenance Expense                        345.00
          Accounting 1 Curriculum                                                             Page 111 of 158

                Rent Expense                               1,900.00
                Salaries Expense                             800.00
                Utilities Expense                            893.00

     26. Indicate whether each account is affected by a closing entry. "Yes" or "No."

          Cash in Bank
          Accounts Receivable
          Supplies
          Equipment
          Accounts Payable
          James Brown, Capital
          James Brown, Withdrawals
          Income Summary
          Cleaning Fees
          Maintenance Expense
          Rent Expense
          Salaries Expense
          Utilities Expense
     27. In the third closing entry, what accounts were debited and credited and for what amounts?
     28. How many accounts will appear on the post-closing trial balance? Name the accounts.
     29. What is the balance of the capital account on the post-closing trial balance?

          Listed below are the account titles for Hays Secretarial Services, each identified by a letter.
          Following the accounts is a list of the closing entries. Using the identifying letters, indicate the
          account(s) to be debited and credited in each closing entry.

          A. Cash in Bank                  E. Mariko Hays, Capital           I. Miscellaneous Expense
          B. Accounts Receivable           F. Mariko Hays, Withdrawals       J. Rent Expense
          C. Computer Equipment            G. Income Summary                 K. Supplies Expense
          D. Accounts Payable              H. Fees                           L. Utilities Expense

     30. Record the closing entry for the revenue account.
     31. Record the closing entry for the expense accounts.
     32. Record the closing entry for the Income Summary account (assume net income).
     33. Record the closing entry for the withdrawals account.


Problem

     34. The general ledger for Ozaki Tax Services on December 31 of the current year is illustrated
         below in T-account form.

          (1) Record the four necessary closing entries on page 15 of the general journal.
          (2) Post the closing entries to the general ledger T accounts provided.
          (3) Prepare a post-closing trial balance using the two-column form provided.
Accounting 1 Curriculum                          Page 112 of 158

            Cash in Bank         Joy Ozaki, Withdrawals
     Dr.                   Cr.    Dr.              Cr.
      +                     -      +                -
    4,000                        3,000


      Accounts Receivable           Income Summary
     Dr.              Cr.         Dr.            Cr.
      +                 -
     500


     Computer Equipment              Accounting Fees
     Dr.            Cr.           Dr.               Cr.
      +              -             -                 +




        Accounts Payable          Miscellaneous Expense
     Dr.               Cr.        Dr.               Cr.
      -                 +          +                 -
                      4,000      3,000


       Joy Ozaki, Capital            Utilities Expense
     Dr.                Cr.       Dr.                 Cr.
      -                  +         +                   -
                      7,000      l,500
           Accounting 1 Curriculum         Page 113 of 158


Chapter 10 Test
Answer Section

TRUE/FALSE

      1.   T
      2.   F
      3.   T
      4.   F
      5.   F
      6.   T
      7.   T
      8.   T
      9.   F
     10.   T
     11.   T
     12.   T


MULTIPLE CHOICE

     13.   D
     14.   B
     15.   D
     16.   A
     17.   C
     18.   C
     19.   D


MATCHING

     20.   F
     21.   B
     22.   C
     23.   D
     24.   E
     25.   A


SHORT ANSWER

                   26.   Cash in     No
           Bank
           Accounts Receivable       No
           Supplies                  No
           Equipment                 No
           Accounts Payable          No
           James Brown, Capital      Yes
        Accounting 1 Curriculum                                                          Page 114 of 158

       James Brown, Withdrawals         Yes
       Income Summary                   Yes
       Cleaning Fees                    Yes
       Maintenance Expense              Yes
       Rent Expense                     Yes
       Salaries Expense                 Yes
       Utilities Expense                Yes
   27. James Brown, Capital is debited for $48; Income Summary is credited for $48.
   28. 6 (Cash in Bank, Accounts Receivable, Supplies, Equipment, Accounts Payable, and James
       Brown, Capital)
   29. $6,748
                   Credit
       30.

        Debit
        H              G
                       Credit
        31.

        Debit
        G              I, J, K, L
                       Credit
        32.

        Debit
        G              E
                       Credit
        33.

        Debit
        E              F


PROBLEM

   34. (1) Note: Provide a general journal with at least 13 lines for student work.

                                         GENERAL JOURNAL                                          Page 15
                                                                        Post.
           Date                           Description                   Ref.          Debit      Credit
                                         Closing Entries
        20—
        Dec.      31       Accounting Fees                                        16,000.00
                                  Income Summary                                                 16,000.00
                  31       Income Summary                                             4,500.00
                                  Miscellaneous Expense                                           3,000.00
                                  Utilities Expense                                               1,500.00
                  31       Income Summary                                         11,500.00
                                  Joy Ozaki, Capital                                             11,500.00
                  31       Joy Ozaki, Capital                                         3,000.00
                                  Joy Ozaki, Withdrawals                                          3,000.00
Accounting 1 Curriculum                                                     Page 115 of 158


        (2)   Cash in Bank                                       Joy Ozaki, Withdrawals
      Dr.                Cr.                                      Dr.          Cr.
       +                  -                                        +            -
     4,000                                                       3,000       3,000



       Accounts Receivable                                      Income Summary
      Dr.              Cr.                                   Dr.             Cr.
       +                 -                                  4,500          16,000
      500                                                   11,500


      Computer Equipment                                         Accounting Fees
     Dr.             Cr.                                     Dr.                Cr.
      +               -                                        -                 +
    15,000                                                  16,000            16,000


         Accounts Payable                                    Miscellaneous Expense
      Dr.               Cr.                                  Dr.               Cr.
       -                 +                                    +                 -
                       4,000                                3,000             3,000


        Joy Ozaki, Capital                                      Utilities Expense
      Dr.                Cr.                                 Dr.                 Cr.
       -                  +                                   +                   -
     3,000             7,000                                1,500              1,500
                      11,500

(3) Note: Provide a 2-column accounting form for student work.

                             Ozaki Tax Services
                          Post-Closing Trial Balance
                             December 31, 20—
Cash in Bank                                     4,000.00
Accounts Receivable                                500.00
Computer Equipment                              15,000.00
Accounts Payable                                                     4,000.00
Joy Ozaki, Capital                                                  15,500.00
                                               19,500.00            19,500.00
         Accounting 1 Curriculum                                                                 Page 116 of 158

                                            Norman Thomas High School
                                              Steven M. Satin, Principal
                                          Gilberto Vega, Assistant Principal

                                                Accounting 1 Final Exam


Name____________________________                 Date_______________________        Class____________


Part A Accounting Vocabulary (40 points)

Directions: In the Answer column, write the letter of the word or phrase that best completes the sentence.
                    The first item is completed for you as an example.

A. outstanding deposits             F. balance sheet                      K. compound entry
B. electronic funds transfer                  G. income statement
C. signature card                   H. ruling
D. net income                                   I. matching principle
E. closing entries                   J. restrictive endorsement


                                                                                                Answer        Score


0. A journal entry having two or more debits and/or credits is called a(n)     ____K______ ___________ 1.___________ are
deposits that have been reported in the checkbook
 but do not appear on the bank statement.                                      ___________ ___________
2.A check returned by the bank because the drawer’s checking
 account does not have sufficient funds to cover the amount of the
 check is a(n) ____________.                                                   ___________ ___________
3.The _____________ is a financial statement that reports the final
 balances in all the asset, liability, and owner’s equity accounts at
 the end of the fiscal period.                                                 ___________ ___________
4.In order to protect both an account holder and the bank against
 checks with forged signatures a(n) _____________ is prepared
 containing the signature(s) of the person(s) authorized to write checks on
 the bank account.                                                             ___________ ___________


5. ____________ means drawing a line under a column of amounts.                ___________ ___________
6. ____________ enables banks to transfer funds from the account of one
 depositor to the account of another quickly and accurately without the
  immediate exchange of checks.                                                  ___________ ___________
7. A(n) ____________ results when revenue is larger than expenses.               ___________ ___________
10. The ____________ states that revenue should be matched against the
            Accounting 1 Curriculum                                                                  Page 117 of 158

       expenses incurred to earn that revenue.                                        ___________ ___________
 9. Journal entries made to close out or reduce to zero the balances in the
       temporary capital accounts and then transfer the net income or
    loss to the capital account are called _____________                              ___________ ___________
10. __________ limits how checks may be handled.                                       ___________    ___________




Part B Accounting Information (20 points)
Directions: One of the choices given with each of the following statements is correct. Write the letter of the   correct answer in the
                 Answer column. The first item is completed for you as an example.


                                                                                              Answer              Score


 10.                 If the Trial Balance section of the work sheet is out of balance, the
              first thing you should do is (A) check the ledger accounts against
              the work, (B) add the columns again, (C) recopy the accounts and
              balances on a new work sheet, (D) look in the ledger for the
              amount of the difference.                                                      _____D____ ___________


 11.                 The total revenue for the period is $25,496, the total expenses are
              $13,387, and the withdrawals account h as an ending balance of
              $2,500. The capital account increased by (A) $12,109, (B) $14,609,
              (C) $9,609, (D) $27,996.                                                       ___________ ___________
  12.                The Income Summary account is classified as a(n) (A) owner’s
              equity account, (B) revenue account, (C) asset account,
              (D) expense account.                                                           ___________ ___________
  13.                Which of the following statements is false? (A) The Income
               Summary account does not have a normal balance side. (B) The
              Income Summary account is used only at the end of the fiscal
              period. (C) The Income Summary account is located in the owner’s
              equity section of the general ledger. (D) The Income Summary
              account is a permanent account.                                                ___________ ___________
   14.        Temporary capital accounts start each fiscal period with (A) debit
              balances, (B) credit balances, (C) zero balances, (D) both debit
              and credit balances.                                                           ___________ ___________
   15.               All the following accounts have a normal debit balance except:
              (A) Accounts Payable, (B) Accounts Receivable, (C) Maintenance
              expense (D) Henry Patson, Withdrawals                                          ___________ ___________
       Accounting 1 Curriculum                                                                     Page 118 of 158



Part C Accounting Principles (40 poiints)
Directions: Circle the letter T in the Answer column if the statement is true; circle the letter F if the
              statement is false. The first item is completed for you as an example.


                                                                                              Answer              Score


 16.     The person or business to whom a check is made payable is the
         payee.                                                                              T              F   ___________
 17.              Net income or net loss is the difference between total revenue
         and total expenses for the period.                                                  T              F   ___________
 2.      When revenue accounts are closed, the Income Summary account
         is debited.                                                                         T              F   ___________
 18.              The source of information for preparing the Income Statement
         is the Income Statement section of the work sheet                                    T             F   ___________
 19.              All liabilities are listed in the Balance Sheet section of the work
         sheet.                                                                               T             F   ___________
 5.      A work sheet is a formal financial statement of the business.                       T          F       _________
 The net income or net loss reported on the Income Statement must
         be the same as the amount calculated on the work sheet.                             T              F   ___________
 7.      A check should be endorsed before it is deposited in the bank.                      T              F   ___________
 8.      Total expenses for the period are reflected in the total of the Credit
         column of the Income Statement section.                                              T             F   ___________
 9.      Checks should be written in ink rather than in pencil.                              T              F   _________
 10.     A net loss for the period is entered in the Credit column of the
         Balance Sheet section of the work sheet.                                             T             F   ___________
            Accounting 1 Curriculum                                                           Page 119 of 158

            NAME ____________________________ DATE _______________________ CLASS ______________

            Norman Thomas High School                                                     Steve Satin, Principal
            Department of Business and Liberal Arts                           Gilberto Vega, Assistant Principal

                                    Accounting 1 Midterm Day 1 Objectives Test
            True/False (2 Points)
            Indicate whether the sentence or statement is true or false.

____    1. Responsibility is one example of a personality trait.
____    2. The Internet is a source of educational and career information.
____    3. In the U.S. economy, for-profit businesses are outnumbered by not-for-profit organizations.
____    4. On-the-job training provides an opportunity to learn the ins and outs of a particular job and get
           paid while you're learning.
____    5. Only businesses that earn a profit will have the economic resources to continue to operate.
____    6. The corporation is the easiest form of business to organize.
____    7. The owner's claims to the assets of a business are liabilities.
____    8. The difference between the debit and credit amounts in an account is the account balance.
____    9. For every transaction recorded in the general journal, these items are always written: date,
           account titles, amounts, and source document or brief explanation.
____ 10. Since the debit and credit amounts in a business transaction are the same, the order in which the
         account titles are recorded in the general journal does not matter.


            Multiple Choice (2 Points)
            Identify the letter of the choice that best completes the statement or answers the question.

____ 11. The amount of money earned after the costs of operating a business are paid is ____.
         a. revenue                                      c. profit
         b. income                                       d. capital
____ 12. Which of the following would not be considered a service business?
         a. General Motors                               c. Delta Air Lines
         b. North American Van Lines                     d. Alamo Rent a Car
____ 13. The most common form of business organization is the ____.
         a. sole proprietorship                          c. corporation
         b. partnership                                  d. not-for-profit organization
____ 14. Accounting is often call the "language of business" because ____.
         a. it is easy to understand
         b. it is fundamental to the communication of financial information
         c. all business owners have a good understanding of accounting principles
         d. accountants in many companies share financial information
____ 15. The most common time period covered by an accounting report is one ____.
         a. quarter                                      c. month
         b. year                                         d. week
            Accounting 1 Curriculum                                                         Page 120 of 158

            NAME _____________________________ DATE _______________________ CLASS ______________

____ 16. If the creditor's financial claim to property totals $1,000 and the owner's financial claim to
         property totals $11,000, the property value is ____.
         a. $10,000                                          c. $12,000
         b. $11,000                                          d. $1,000
____ 17. The account Accounts Receivable is an example of a(n) ____.
         a. asset                                            c. owner's equity
         b. liability                                        d. none of the above
____ 18. All of the following account titles are asset titles except ____ .
         a. Office Furniture                                 c. Cash in Bank
         b. Accounts Payable                                 d. Equipment
____ 19. A business transaction that involves a purchase on account is considered to be a(n) ____.
         a. cash transaction                                 c. investment by the owner
         b. credit transaction                               d. expense transaction
____ 20. If Paul Abdou deposits $30,000 in a checking account in the name of his business, the two
         accounts affected are ____.
         a. Cash in Bank and Computer Equipment              c. Cash in Bank and Paul Abdou, Capital
         b. Cash in Bank and Accounts Receivable             d. Cash in Bank and Accounts Payable


            Completion (2 Points)
            Complete each sentence or statement.
            Indicate whether each of the following statements should be completed with the word debit or
            credit.

       21. The normal balance for asset accounts is a _______________.
       22. A decrease in an asset account is recorded as a ______________.
       23. The normal balance for Accounts Receivable is a _______________.
       24. The normal balance for Accounts Payable is a _______________.
       25. The normal balance for the owner's withdrawals account is a _______________.


            Matching (2 Points)

            Match each item with the correct statement below.
            a. accounting period                           k.   GAAP
            b. accounting system                           l.   going concern
            c. business entity                             m.   loss
            d. capital                                     n.   management accounting
            e. charter                                     o.   manufacturing business
            f. corporation                                 p.   merchandising business
            g. entrepreneur                                q.   partnership
            h. free enterprise system                      r.   profit
            i. financial accounting                        s.   service business
            j. financial reports                           t.   sole proprietorship
             Accounting 1 Curriculum                                                       Page 121 of 158

             NAME _____________________________ DATE _______________________ CLASS ______________

____ 26. A(n) ____is an individual who transforms ideas for products or services into real-world
         businesses.
____ 27. ____ summarize information about the financial status of a business.
____ 28. Following the ____ accounting assumption, the accountant prepares reports as though the
         business will operate indefinitely.
____ 29. The ____ is the period of time covered by an accounting report.
____ 30. The ____ is designed to collect, document, and report on the financial transactions affecting the
         business.
____ 31. ____ is money invested in a business by its owner(s) or the money provided by banks or
         investors.
____ 32. ____ is the legal document giving a business the right to operate as a corporation.
____ 33. Under the ____ accounting assumption, a business owner must keep the financial records for the
         business separate from personal records.
____ 34. A(n) ____ is a business organization that must get permission from the state to operate.
____ 35. If a business spends more money to operate than it earns from the sale of goods or services, it is
         operating at a(n) ____.
____ 36. In a(n) ____, people are free to produce the goods and services they choose.
____ 37. A business with a single owner is a(n) ____.
____ 38. ____ are the rules accountants follow when recording and reporting accounting information.
____ 39. A business is operating at a(n) ____ if it earns more money than it spends.
____ 40. ____ is concerned with preparing reports for external users such as investors or creditors.
____ 41. A(n) ____ buys finished goods and sells them to individuals or other businesses.
____ 42. ____ is concerned with preparing information for internal users.
____ 43. A business that two or more people agree to own together is a(n) ____.
____ 44. A business that provides a needed service for a fee is called a(n) ____.

             Match each item with the correct statement below. (2 Points)

             a.   expenses                                    e. revenue recognition
             b.   fees                                        f. temporary capital
             c.   permanent                                   g. withdrawal
             d.   revenue
____   45.   The costs of doing business are known as ____.
____   46.   The balance of a(n) ____ account does not carry forward to the next accounting period.
____   47.   Money a business earns from the sale of goods or services is the ____.
____   48.   The dollar balance of a(n) ____ account is carried forward from one period to the next.
____   49.   A(n) ____ occurs when the owner takes assets out of the business for personal use.
____   50.   When a business follows the GAAP of ____, revenue is recorded on the date it is earned.
           Accounting 1 Curriculum   Page 122 of 158



Accounting 1 Midterm Day 1
Answer Section

TRUE/FALSE

      1.   T
      2.   T
      3.   F
      4.   T
      5.   T
      6.   F
      7.   F
      8.   T
      9.   F
     10.   F


MULTIPLE CHOICE

     11.   B
     12.   A
     13.   A
     14.   B
     15.   B
     16.   C
     17.   A
     18.   B
     19.   B
     20.   C


COMPLETION

     21.   debit
     22.   credit
     23.   debit
     24.   credit
     25.   debit


MATCHING

     26.   G
     27.   J
     28.   L
     29.   A
     30.   B
     31.   D
      Accounting 1 Curriculum   Page 123 of 158

32.   E
33.   C
34.   F
35.   M
36.   H
37.   T
38.   K
39.   R
40.   I
41.   P
42.   N
43.   Q
44.   S

45.   A
46.   F
47.   D
48.   C
49.   G
50.   E
           Accounting 1 Curriculum                                                         Page 124 of 158


Accounting 1 Midterm Day 2
Answer Section

YES/NO

      1.   Y
      2.   Y
      3.   N
      4.   Y
      5.   Y
      6.   N
      7.   Y


SHORT ANSWER

      8. A service business
                    Credit
         9.

         Debit
         F              A
     10. Yes
                        Credit
           11.

           Debit
           C            E
                        Credit
           12.

           Debit
           G            A


PROBLEM

     13. 1.    A
         2.    A
         3.    L
         4.    A
         5.    A
         6.    O
         7.    A
     14.
         1.      Identify the accounts affected.
         2.      Classify the accounts affected.
         3.      Determine the amount of increase or decrease for each account affected.
         4.      Which account is debited? For what amount?
         5.      Which account is credited? For what amount?
     Accounting 1 Curriculum                                                         Page 125 of 158

    6. What is the complete entry in T account form?
15. Note: Provide 7 T accounts for student use.

     (1) through (3)

            Cash in Bank                     Accounts Receivable                  Processing Supplies
     (1) $20,000    (2) $ 3,500                                               (5) $ 739
                    (5)     739                                               (7)    539
                    (6)     600
                    (8)     495
                    (9)     539
     Bal. $14,127                                                             Bal. $ 1,278


          Office Equipment                  Computer Equipment                     Accounts Payable
     (4) $ 975                           (2) $ 3,500                          (6) $ 600     (4) $ 975
     (8)    495                          (3)     600                          (9)   539     (7)    539
     Bal. $1,470                         Bal. $4,100                                        Bal. $ 375


            Pat Kwok, Capital
                   (1) $20,000
                   (3)     600
                   Bal. $20,600

     (4) through (8)
     Assets:                                           Liabilities and Owner's Equity:
     Cash in Bank                 $ 14,127             Accounts Payable                      $ 375
     Accounts Receivable                 0             Pat Kwok, Capital                     _20,600
     Processing Supplies             1,278
     Office Equipment                1,470
     Computer Equipment            __4,100
                                                      Total Liabilities
    Total Assets               $ 20,975               and Owner's Equity                     $ 20,975
16. Note: Provide a general journal with at least 10 lines for student use.

                                   GENERAL JOURNAL                                                Page 2
       Date                                                                        Debit          Credit
     20—
     Nov.      1 Rent Expense                                                      900.00
                      Cash in Bank                                                                900.00
                            Check 101
               5 Cash in Bank                                                     200.00
                      Accounts Receivable – Peggy Dunne                                           200.00
                            Receipt 30
               7 Bill Macy, Withdrawals                                             20.00
                      Supplies                                                                     20.00
                            Memorandum 15
    Accounting 1 Curriculum                                              Page 126 of 158

17.Note: Provide a 2-column accounting form for student use.


                                        Norris Billing Services
                                            Trial Balance
                                         December 31, 20—
    Cash in Bank                                                   3,340.00
    Accounts Receivable—Aaronson's                                   715.00
    Computer Equipment                                             4,500.00
    Accounts Payable—Modern Office Equipment                                      920.00
    Elena Norris, Capital                                                       6,865.00
    Elena Norris, Withdrawals                                       550.00
    Income Summary                                                      —             —
    Professional Fees                                                           2,300.00
    Advertising Expense                                               90.00
    Rent Expense                                                     600.00
    Supplies Expense                                                 150.00
    Utilities Expense                                                140.00    ________
             Totals                                               10,085.00    10,085.00
            Accounting 1 Curriculum                                                         Page 127 of 158

            NAME _____________________________ DATE _______________________ CLASS ______________

            Norman Thomas High School                         Steve Satin, Principal
            Department of Business and Liberal Arts                          Gilberto Vega, Assistant Principal


                                  Accounting 1 FINAL Day 1 Objectives Test
            True/False
            Indicate whether the sentence or statement is true or false.
____    1. Bank service charges should be recorded in the checkbook before reconciling the bank statement.
____    2. A stop payment order and voiding a check mean the same thing.
____    3. Checks written in pencil are acceptable.
____    4. A Form W-4 lists the marital status and number of exemptions claimed by the employee.
____    5. An example of a voluntary deduction is one for a health insurance premium.
____    6. The payroll register summarizes information about employees' earnings during a pay period.
____    7. The social security system was established by the Federal Insurance Contributions Act.
____    8. The amount entered for Payroll Tax Expense is the total gross earnings of the pay period.
____    9. When a business transfers money from its regular checking account to the payroll checking
           account, the check is written for the total net pay amount.
____ 10. The payroll register is the source of information for preparing the journal entry for payroll.


            Completion
            Complete each sentence or statement.
            Indicate whether each of the following statements should be completed with the word debit or
            credit.


       11. The total amount of gross earnings is entered on the _______________ side of the Salaries
           Expense account.
       12. The account Salaries Expense has a normal _______________ balance.
       13. The total net pay for the period is recorded as a _______________ to the Cash in Bank account.
       14. When the federal government is paid the amount owed for social security tax, an entry is made on
           the _______________ side of the Social Security Tax Payable account.
       15. Payroll Tax Expense has a normal _______________ balance.
            Accounting 1 Curriculum                                                         Page 128 of 158


            NAME _____________________________ DATE _______________________ CLASS ______________

            Matching
            Match each item with the correct statement below.
            a. bank service charge                          l.   external controls
            b. bank statement                               m. internal controls
            c. canceled checks                              n. NSF check
            d. check                                        o. outstanding checks
            e. checking account                             p. outstanding deposits
            f.   deposit slip                               q. payee
            g. depositor                                    r.   reconciling the bank statement
            h. drawee                                       s. restrictive
            i.   drawer                                     t.   signature card
            j.   electronic funds transfer system           u. stop payment order
            k. endorsement                                  v. voiding a check


____ 16. An itemized record of all the transactions occurring in a depositor's account over a given period is
         a(n) ____.
____ 17. The practice of marking a check that contains an error so that it will not be used is known as
         ____.
____ 18. The bank on which a check is written is the ____.
____ 19. The person who signs a check is the ____.
____ 20. ____ are checks that are paid by the bank, deducted from the depositor's account, and returned
         with the bank statement.
____ 21. The ____ is the person or business to whom a check is written.
____ 22. ____ are checks that have been written but not yet presented to the bank for payment.
____ 23. A(n) ____ is an authorized signature that is written or stamped on the back of a check.
____ 24. ____ are steps that a business takes to protect its cash and other assets.
____ 25. A demand by the depositor that the bank not honor a certain specific check is a(n) ____.
____ 26. With a(n) ____, a business can deposit cash in a bank and write checks against the account
         balance.
____ 27. ____ is the process of determining any differences between the balance shown on the bank
         statement and the checkbook balance.
____ 28. A(n) ____ is a written order from a depositor telling the bank to pay a stated amount of cash to
         the person or business named on the order.
____ 29. A(n) ____ is a person or business that has cash on deposit at a bank.
____ 30. A(n) ____ endorsement limits how a check may be handled to protect the check from being
         cashed by anyone except the payee.
           Accounting 1 Curriculum                                                        Page 129 of 158



           NAME _____________________________ DATE _______________________ CLASS ______________

           Match each item with the correct statement below.
           a. 40l (k) plan                                 k. net pay
           b. allowance                                    l.   overtime rate
           c. accumulated earnings                         m. pay period
           d. commission                                   n. payroll
           e. deduction                                    o. payroll clerk
           f.   direct deposit                             p. payroll register
           g. electronic badge readers                     q. salary
           h. employee's earnings record                   r.   time card
           i.   exemptions                                 s.   wage
           j.   gross earnings


____ 31. A(n) ____ is paid to the employee as a percentage of the employee's sales.
____ 32. The amount of time for which an employee is paid is called the ____ .
____ 33. The ____ is an individual payroll record kept for each employee.
____ 34. If an employee has ____ ,the employer placed the employee's net pay into their personal bank
         account.
____ 35. Most companies use a(n) ____ to keep track of an hourly wage employee's hours.
____ 36. A(n) ____ is a device used to scan certain information encoded on a magnetic strip on an
         employee's time card or identification badge.
____ 37. An employee paid 1 1/2 times the regular wage is paid at a(n) ____ .
____ 38. ____ are the year-to-date gross earnings of an employee.
____ 39. A(n) ____ is an amount subtracted from gross earnings.
____ 40. A list of employees in a business and the earnings due to each employee for a specific period of
         time is a(n) ____ .


           Short Answer (4 Points)
           Indicate whether each of the following payroll items is usually an amount withheld only from the
           employee's wages (W), a tax or cost paid only by the employer (T), or an amount both withheld
           from the employee's wages and a tax or cost paid by the employer (B).


      41. Employee's federal income taxes
      42. Federal unemployment taxes
      43. Medical insurance premiums
      44. United Way donations
    Accounting 1 Curriculum                                                        Page 130 of 158

45. Pension contributions
    NAME _____________________________ DATE _______________________ CLASS ______________

    Norman Thomas High School                                                    Steve Satin, Principal
    Department of Business and Liberal Arts                          Gilberto Vega, Assistant Principal

                          Accounting 1 Final Day 2 Performance Test
    Short Answer (10 Points Each)

    The trial balance section of the work sheet for Top Hat Chimney Service for the month ended
    October 31 appears below. Based on the information presented, answer the questions that follow.

     Acct.                                                       Trial Balance
      No.                    Account Name                     Debit         Credit
     101      Cash in Bank                                     1,298.00
     105      Accts. Rec.—Holden Enterprises                   1,650.00
     108      Accts. Rec.—Louise Wright                          220.00
     110      Cleaning Equipment                               3,864.00
     115      Office Equipment                                 2,990.00
     120      Truck                                            9,000.00
     201      Accts. Pay.—Jared Equip. Co.                                     872.00
     205      Accts. Pay.—Haroun Motors                                      2,120.00
     301      Timothy Orr, Capital                                         14,567.00
     302      Timothy Orr, Withdrawals                           600.00
     303      Income Summary                                         —             —
     401      Cleaning Fees                                                  3,395.00
     501      Advertising Expense                                260.00
     501      Advertising Expense                                260.00
     505      Maintenance Expense                                277.00
     510      Miscellaneous Expense                               20.00
     515      Rent Expense                                       600.00
     520      Utilities Expense                                  175.00

 1. What question should the third line of the heading for this work sheet answer? How would the
    third line be worded?
 2. Did Top Hat Chimney Service have a net income or net loss for the month? What was the amount
    of the net income or net loss?
    The following amounts appear on the work sheet for West Side Cleaners. Use the information to
    answer the following questions.
          Cash in Bank                           $3,482.00
          Accounts Receivable                       800.00
          Supplies                                  903.00
          Equipment                               4,236.00
          Accounts Payable                        2,673.00
          James Brown, Capital                    7,926.00
          James Brown, Withdrawals                1,130.00
          Income Summary                                —
          Cleaning Fees                           3,890.00
          Maintenance Expense                       345.00
          Rent Expense                            1,900.00
          Salaries Expense                          800.00
   Accounting 1 Curriculum                                                             Page 131 of 158

         Utilities Expense                            893.00

3. In the third closing entry, what accounts were debited and credited and for what amounts?

   Listed below are the account titles for Hays Secretarial Services, each identified by a letter.
   Following the accounts is a list of the closing entries. Using the identifying letters, indicate the
   account(s) to be debited and credited in each closing entry.

   A. Cash in Bank                  E. Mariko Hays, Capital           I. Miscellaneous Expense
   B. Accounts Receivable           F. Mariko Hays, Withdrawals       J. Rent Expense
   C. Computer Equipment            G. Income Summary                 K. Supplies Expense
   D. Accounts Payable              H. Fees                           L. Utilities Expense

4. Record the closing entry for the expense accounts.


   Problems
   Instructions: Choose 3 out of 5 Problems below. (20 Points each)

5. The general ledger accounts and their ending balances for the Greenleaf Appliance Repair Center
   are listed below. Complete the work sheet for the month ended September 30.

   101     Cash in Bank                                                              $ 4,396.59
   105     Accounts Receivable—Susan Jenny                                               845.43
   110     Accounts Receivable—Bill Ritzmann                                             298.32
   115     Office Equipment                                                            6,485.50
   120     Repair Equipment                                                           10,540.38
   205     Accounts Payable—Hanover Supply                                             3,485.34
   210     Accounts Payable—Price Co.                                                  1,294.07
   301     J. D. Greenleaf, Capital                                                   14,455.83
   302     J. D. Greenleaf, Withdrawals                                                  800.00
   401     Repair Fees                                                                 9,506.54
   501     Advertising Expense                                                         1,350.00
   505     Miscellaneous Expense                                                         507.58
   510     Rent Expense                                                                1,900.00
   515     Repair Expense                                                                934.49
   520     Utilities Expense                                                             683.49
6. Indicate in the table below the financial statement on which each of the following accounts
   appear.
                                          Financial Statements
                                                            Statement of
                                        Income               Changes in               Balance
               Account                 Statement           Owner's Equity               Sheet
   1. Cash in Bank                  ___________            ____________            ___________
   2. Utilities Expense             ___________            ____________            ___________
   3. Accounts Payable              ___________            ____________            ___________
   4. Commissions                   ___________            ____________            ___________
   5. Capital                       ___________            ____________            ___________
   6. Withdrawals                   ___________            ____________            ___________
Accounting 1 Curriculum                                                         Page 132 of 158



NAME _____________________________ DATE _______________________ CLASS ______________

Problem

    7. Toni Messenger owns a delivery service. The following are the account titles used in the
       business.

Cash in Bank                       Accts. Pay.—C. F. Mays Co.           Rent Expense
Accts. Rec.—J & L Law Firm         Toni Messenger, Capital              Utilities Expense
Office Equipment                   Toni Messenger, Withdrawals
Delivery Equipment                 Delivery Fees

Record the following business transactions on page 11 of the general journal.

Transactions:
Sept.   9 Purchased delivery equipment on account from C. F. Mays Co., $14,500,
           Invoice 308.
       10 Sold a piece of office equipment, $150, Receipt 250.
       11 Paid the monthly telephone bill, $73, Check 291.
       18 Received $970 for delivery services, Receipt 251.
       21 Received $500 from J & L Law Firm to apply on account, Receipt 252.
       24 Toni Messenger invested an additional $500 in the business, Memorandum 102.
       30 Paid C. F. Mays Co. $175, on account, Check 292.


8. The following information appeared on the work sheet of Diana's Decorating Service for the
            month ended December 31.

Acct.                                        Income Statement           Balance Sheet
No.               Account Name                Debit     Credit          Debit     Credit
101     Cash in Bank                                                    6,100
105     Accts. Rec.–Juan Cardillo                                         425
115     Decorating Supplies                                             7,080
120     Equipment                                                      10,500
205     Accts. Pay.–Bayou Wallpaper                                                1,350
301     Diana Obai, Capital                                                       20,518
305     Diana Obai, Withdrawals                                         1,200
310     Income Summary                             —           —
401     Decorating Fees                                     4,895
501     Advertising Expense                       150
510     Miscellaneous Expense                      95
530     Rent Expense                              950
540     Utilities Expense                         263    _______     _______     _______
                                                1,458       4,895      25,305      21,868
        Net Income                              3,437    _______     _______        3,437
                                                4,895       4,895      25,305      25,305

A. Use the work sheet data to prepare an income statement for Diana's Decorating Service for the
   month ended December 31.
Accounting 1 Curriculum                                                                Page 133 of 158

B. Prepare a statement of changes in owner's equity for Diana's Decorating Services for the
   month ended December 31. Diana Obai made no additional investments during the period.
C. Prepare a balance sheet for Diana's Decorating Services as of December 31.
D. Journalize the closing entries for Diana's Decorating Service on general journal page 37.
Accounting 1 Curriculum                                                        Page 134 of 158




Accounting Cycle Spreadsheet Activity
Using the Electronic Working Papers (Excel ® file named 2excel.xls), record the following
transactions:

                                      IRENE'S COIN LAUNDRY
                                           Trial Balance
                                          June 30, 2002
Account No.                                 Debit         Credit
101            Cash                      $ 8,750
112            Accounts Receivable       2,320
126            Supplies                  1,900
157            Equipment                 9,000
201            Accounts Payable                        $ 5,500
206            Unearned Revenue                        800
301            Irene Boris, Capital      _______       15,670
                                         $21,970       $21,970


The July transactions were as follows:
 July 5   Received $850 cash from customers on account.
    10    Billed customers for services performed, $6,300.
    15    Paid employee salaries, $1,400.
    16    Performed $600 of services for customers who paid in advance in June.
    20    Paid $2,000 to creditors on account.
    21    Received $250 for services rendered on a cash basis (i.e. not on account).
    26    Purchased supplies on account, at a cost of $350.
    29    Withdrew $600 for personal use.
    30    Paid utilities $900


Instructions
(a)   Enter the opening balances in the ledger accounts as of July 1. Write "Balance" in the
      explanation space and insert a check mark in the reference column. Provision should be
      made for the following additional accounts: No. 306 Irene Boris, Drawings, No. 426 Laundry
      Revenue, No. 726 Salaries Expense, and No. 732 Utilities Expense.
(b)   Journalize the transactions.
(c)   Post to the ledger accounts.
(d)   Prepare a trail balance as of July 31, 2002.


SOURCE: Wegart, Kieso, & Kimmel. Accounting Principles, Sixth Edition. New York: John Wiley
& Sons, 1999.
           Accounting 1 Curriculum           Page 135 of 158




Accounting 1 Midterm Day 1 Objectives Test
Answer Section

TRUE/FALSE

      1.   T
      2.   F
      3.   F
      4.   T
      5.   T
      6.   T
      7.   T
      8.   F
      9.   T
     10.   T


COMPLETION

     11.   Debit
     12.   Debit
     13.   Credit
     14.   Debit
     15.   Debit


MATCHING

     16.   B
     17.   V
     18.   H
     19.   I
     20.   C
     21.   Q
     22.   O
     23.   K
     24.   M
     25.   U
     26.   E
     27.   R
     28.   D
     29.   G
     30.   S

     31. D
     32. M
          Accounting 1 Curriculum   Page 136 of 158

    33.   H
    34.   F
    35.   R
    36.   G
    37.   L
    38.   C
    39.   E
    40.   N


SHORT ANSWER

    41.   W
    42.   T
    43.   W or B
    44.   W
    45.   W or B
           Accounting 1 Curriculum                                                         Page 137 of 158



Accounting 1 Final Day 2 Performance Test
Answer Section

SHORT ANSWER

      1. "When?": For the Month Ended October 31, 20—
      2. Net income of $2,063.00
      3. James Brown, Capital is debited for $48; Income Summary is credited for $48.
                   Credit
         4.

           Debit
           G         I, J, K, L


PROBLEM

      5. Note: Provide a 6-column work sheet for student use.

                                                 Greenleaf Appliance Repair Center
                                                            Work Sheet
                                              For the Month Ended September 30, 20—

           Acct.                                   Trial Balance         Income Statement         Balance Sheet
            No.           Explanation              Debit    Credit        Debit    Credit       Debit        Credit
           101     Cash in Bank                   4,396.59                                      4,396.59
           105     Accts. Rec.—Susan                845.43                                        845.43
                      Jenny
           110     Accts. Rec.—Bill                 298.32                                       298.32
                     Ritzmann
           115     Office Equipment               6,485.50                                      6,485.50
           120     Repair Equipment              10,540.38                                     10,540.38
           205     Accts.Pay.—Hanover                         3,485.34                                        3,485.34
                     Supply
           210     Accts. Pay.— Price Co.                     1,294.07                                        1,294.07
           301     J. D. Greenleaf, Capital                  14,455.83                                       14,455.83
           302     J. D. Greenleaf,                 800.00                                       800.00
                    Withdrawals
           303     Income Summary                      —            —         —           —
           401     Repair Fees                                9,506.54              9,506.54
           501     Advertising Expense            1,350.00               1,350.00
           505     Miscellaneous Expense            507.58                 507.58
           510     Rent Expense                   1,900.00               1,900.00
           515     Repair Expense                   934.49                 934.49
           520     Utilities Expense                683.49                 683.49
                                                 28,741.78   28,741.78   5,375.56   9,506.54   23,366.22     19,235.24
                   Net Income                                            4,130.98                             4,130.98
                                                                         9,506.54   9,506.54   23,366.22     23,366.22
      6.
   Accounting 1 Curriculum                                                           Page 138 of 158

   1.   Balance sheet
   2.   Income statement
   3.   Balance sheet
   4.   Income statement
   5.   Statement of changes in owner's equity, balance sheet
   6.   Statement of changes in owner's equity
7. A.   Note: Provide a 2-column accounting form for student use.

                                              Emmett Tree Service
                                                Income Statement
                                       For the Month Ended June 30, 20—
   Revenue:
       Service Fees                                                                                     3,408.91
   Expenses:
       Advertising Expense                                                                655.00
       Maintenance Expense                                                                175.43
       Rent Expense                                                                       750.00
       Utilities Expense                                                                  132.65
           Total Expenses                                                                               1,713.08
   Net Income                                                                                           1,695.83

   B. Note: Provide a 2-column accounting form for student use.

                                               Emmett Tree Service
                                                 Balance Sheet
                                                 June 30, 20—
                                Assets
   Cash in Bank                                                                     3,814.61
   Accounts Receivable – Marge Balzotti                                               382.97
   Accounts Receivable – Malik Gaines                                                 521.46
   Office Equipment                                                                 2,930.65
   Tools                                                                            4,186.50
       Total Assets                                                                                    11,836.19

                              Liabilities
   Accounts Payable – Cardenes Corp.                                                1,607.52
   Accounts Payable – Woods Tools, Inc.                                             2,780.39
      Total Liabilities                                                                                 4,387.91

                              Owner's Equity
   James Emmett, Capital                                                                                7,448.28
       Total Liabilities and Owner's Equity                                                            11,836.19
8. (1) Note: Provide a general journal with at least 13 lines for student work.

                                 GENERAL JOURNAL                                                   Page 15
                                                                     Post.
        Date                      Description                        Ref.         Debit        Credit
                                 Closing Entries
   20—
   Dec.        31   Accounting Fees                                           16,000.00
                           Income Summary                                                      16,000.00
Accounting 1 Curriculum                                                     Page 139 of 158

       31     Income Summary                                            4,500.00
                     Miscellaneous Expense                                              3,000.00
                     Utilities Expense                                                  1,500.00
       31     Income Summary                                          11,500.00
                     Joy Ozaki, Capital                                                11,500.00
       31     Joy Ozaki, Capital                                        3,000.00
                     Joy Ozaki, Withdrawals                                             3,000.00

        (2)   Cash in Bank                                       Joy Ozaki, Withdrawals
      Dr.                Cr.                                      Dr.          Cr.
       +                  -                                        +            -
     4,000                                                       3,000       3,000



       Accounts Receivable                                      Income Summary
      Dr.              Cr.                                   Dr.             Cr.
       +                 -                                  4,500          16,000
      500                                                   11,500


      Computer Equipment                                         Accounting Fees
     Dr.             Cr.                                     Dr.                Cr.
      +               -                                        -                 +
    15,000                                                  16,000            16,000


         Accounts Payable                                    Miscellaneous Expense
      Dr.               Cr.                                  Dr.               Cr.
       -                 +                                    +                 -
                       4,000                                3,000             3,000


        Joy Ozaki, Capital                                      Utilities Expense
      Dr.                Cr.                                 Dr.                 Cr.
       -                  +                                   +                   -
     3,000             7,000                                1,500              1,500
                      11,500

(3) Note: Provide a 2-column accounting form for student work.

                             Ozaki Tax Services
                          Post-Closing Trial Balance
                             December 31, 20—
Cash in Bank                                     4,000.00
Accounts Receivable                                500.00
Computer Equipment                              15,000.00
Accounts Payable                                                     4,000.00
Joy Ozaki, Capital                                                  15,500.00
                                               19,500.00            19,500.00
Accounting 1 Curriculum                                                    Page 140 of 158


                                            A
Account Receivable: The total amount of money owed to a business.

Accounts receivable subsidiary ledger: A separate ledger that contains accounts for all
charge customers; it is summarized in the Accounts Receivable controlling account in
the general ledger.

Accumulated depreciation: The total amount of depreciation for a plant asset that has
been recorded up to a specific point in time.

Accumulated earnings: The employee’s year-to-date gross earnings, or the employee’s
gross earning from the beginning of the year through the end of each pay period.

Adjustment: An amount that is added to or subtracted from an account balance to bring
that balance up to date.

Administrative expense: Costs related to the management of a business ( for example,
office expense).

Aging of accounts receivable method: A method of estimating bad debts expense in
which each customer’s account is examined and classified by age; the age classifications
are multiplied by certain percentages; and the total estimated uncollectible amounts are
added to determine the end-of-period balance of Allowance for Uncollectible Accounts.

Allowance: Reduces amount of income tax to be withheld.

Allowance method: A method of accounting for uncollectible accounts in which an
estimate is made of the amount of sales on account for which payment will not be
received.

Assets: Property or items of value owned by a business.

Authorized capital stock: The maximum number of shares of stock a corporation may
issue.


                                              B
Balance sheet: A report of the balances in all assets, liability, and owner’s equity
accounts at the end of the period.

Bank discount: The interest charge deducted in advance on a non-interest-bearing note
payable.
Accounting 1 Curriculum                                                     Page 141 of 158

Bank service charge: A fee the bank charges for maintaining bank records and
processing bank statement items for the depositor.

Bank statement: An itemized record of all the transactions in a depositor’s account over
a given period, usually a month.
Bankcard: A card issued by a bank that can be used to withdraw cash and to make
payment goods and services at many businesses in place of writing a check.

Bankcard fee: A charged for handling bank card sales slips; it is usually based on the
total dollar volume of the bank card sales processed.

Base year: A year or period that is used for comparison in financial statements analysis.

Beginning inventory: The merchandise a business has on hand at the beginning of a
fiscal period.

Board of directors: A group of people, elected by the common stockholders, who are
responsible for the plant asset minus the accumulated depreciation.

Book value: The value of an asset at a specific point in time. For a plant asset, it equals
the initial cost of the plant asset minus the accumulated depreciated.

Book value of accounts receivable: The amount the business can reasonably expect to
receive from all its charge customers.

Business entity: Exist independently of its owner’s personal holdings. The accounting
records and reports are maintained separately and contain financial information related
only to the business.

Business transaction: a business event, such as the buying, selling or exchange of goods,
that causes a change in the assets, liabilities, or owner’s equity of a business.


                                            C
Calendar year: Period for which a business begins on January 1 and ends on December
31.

Canceled checks: Checks paid by the bank and deducted from the depositor’s account.

Capital: Money supplied by investors, banks, owners of a business. Refers to the dollar
value of assets contributed to the business.

Capital Stock: The account the represent the total amount of investment in the
corporation by its stockholders (owners).
Accounting 1 Curriculum                                                   Page 142 of 158

Cash Discount: The amount a customer can deduct from the amount owed for purchases
merchandise if payment is made within a certain time.

Cash Payment Journal: A special used to record all transactions in which cash is pay
out or decreased.

Cash Receipt: The cash receive by a business.

Cash Sale: A transaction in which the business receives full payment for the
merchandise sold at the merchandise sold at the time of the sale.

Certified public accountant: A public accountant who has passed the licensing exam on
accounting theory, practice, auditing, and business law. (CPA)

Change fund: An amount of money, consisting of varying denominations of bills and
coins that is used to make change in cash transactions.

Charge customer: A customer to whom a sale on account is made.

Chart of accounts: A list of all the accounts and their assigned account number, used in
journalizing transactions.

Charter: A legal written permission that gives a corporation certain rights and privileges
and spells out the rules under which the corporation is to the person or business named on
the check.

Check: A written order from a depositor telling the bank to pay a stated amount of cash
to the person or business named on the check.

Check stub: A source document that lists the same information that appears on a check
and shows the balance in the checking account before and after each check is written.

Checking account: Allows a person or business to deposit cash in a bank and to write
checks against the account balance.

Closely Held Corporation: A corporation often owned by a few people or by a family
that does not offer its stocks for sales to general public.

Closing entries: Journal entries made to close, or reduce to zero, the balances in the
temporary capital accounts and to transfer the net income or net for the period to the
capital account.

Commission: A account pay to an employee base on a percentage base on the
employee’s sales.

Common stock: The stock issued by a corporation when it is authorized to issue only
one class of stocks.
Accounting 1 Curriculum                                                     Page 143 of 158



Comparability: The accounting principle that allows the financial information from one
period to be compare to that of another period; also, the comparison of financial
information of two or more businesses.

Compound Entry: A journal entry with two or more debits or two or more credits.

Computerized Accounting system: A system in which financial information is recorded
by entering it into a computer.

Conservatism principle: Accounting guideline requiring that accountants choose the
safer, or more conservative, method when there is a choice of procedures.

Consistency principle: The consistent use of an inventory costing method helps owners
and creditors compare financial reports from one period to another.

Contra Accounts: An account whose balance is a decrease to another account.

Controlling Account: An account that acts as a control on the accuracy of the accounts
in a related subsidiary ledger; its balance must equal the total of all the accounts balances
in the subsidiary ledger.

Corporation: Business organization that is recognized by the law to have a life of its
own.

Correcting Entry: An entry made to correct an error in a journal entry discovered after
posting.

Cost of merchandise: The actual cost to the business of the merchandise sold to
customers.

Credit: An agreement to pay for a purchase at a later time; an entry to the right of the
“T” account.

Credit Cards: Cards containing a customers and account presented when buying
merchandise on account.

Credit Memorandum: A form that lists the details of a sales return or sales allowances.

Credit terms: Terms that set out the time allow for payment for a sale on account.

Creditor: A person or business that has a claims to the assets of a business; a person or
business to which money is owed.

Current Assets: Assets that are either used up or converted to cash during the normal
operation cycle of the business, usually one year.
Accounting 1 Curriculum                                                    Page 144 of 158

Current liabilities: Debts of the business that must be paid or within the next accounting
period.

Current ratio: The relationship between current and current liabilities; calculated by the
dollar amount of current assets by the dollar amount of current liabilities.


                                            D
Debit: An amount enters on left the side of the “T” account.

Debit Memorandum: The form a business uses to notify its supplier (creditor) of a
return or allowances.

Deduction: An amount that is subtracted from an employee’s gross earnings.

Deposit slip: A bank form listing the cash and checks to be deposited.

Depositor: A person or business that has cash in a bank.

Depreciation: Allocating the cause of a plant asset over an asset’s useful life.

Direct Deposit: The depositing of an employee’s net pay directly into her or his personal
bank account; usually made thru electronic funds transfer.

Direct write off method: A procedure in which an uncollectible account is remove from
the accounts receivable subsidiary ledger and the controlling accounts in the general
ledgers when a business determines that the account owed is not going to be paid.

Discount Period: The period of time within an invoice must be paid if a discount is to be
taken.

Disposal Value: The estimated value of a plant asset at its replacement time; often
called trade-in value or salvage value.

Dividend: A return on the investments by the stockholders of a corporation’s retained
earnings.

Double:entry accounting: A financial record keeping system in which each transaction
affects at least two accounts; for each debit there must be equal credit.

Drawee: The bank on which a check is written.

Drawer: The person who signs a check.

Due dates: The date by which an invoice must be paid.
Accounting 1 Curriculum                                                     Page 145 of 158


                                             E
Electronic badge readers: Employee is issued an identification badge with a magnet
strip that contains employee information. When the employee inserts the identification
badge into the badge reader, the magnetic stripe is scanned and information is transferred
directly to the computer.


Electronic Federal Tax Payment system (EFTPS): Larger business deposit income tax
payments by electronic funds transfer.

Electronic Funds Transfer System (EFTS): Allows banks to transfer funds among
accounts quickly and accurately without the exchange of checks.

Employee’s earning record: An individual payroll record prepared for each employee;
includes data on earnings, deductions, net pay, and accumulated earnings.

Ending inventory: The merchandise a business has on hand at the end of a fiscal period.

Endorsement: An authorized signature written or stamped on the back of a check
representing receipts and deposit or payment of check.

Entrepreneur: A person who transforms ideas for products or services into real:world
businesses.

Equity: The total financial claims to the assets, or property, of a business.

Expense: The cost of the goods or services that are used to operate a business; expenses
decrease owner’s equity.

External controls: The measures and procedures provided outside the business to
protect cash other assets.


                                             F
Face value: The amount written on the face of a promissory note; usually the same as the
principle.

Federal Tax Deposit Coupon: A form sent with payment for FICA and federal income
taxes or federal unemployment taxes to indicate the total amount of taxes being paid.


Federal Unemployment Tax Act (FUTA): Requires employers to pay unemployment
taxes.

Financial accounting: Reporting information to external users (individuals not directly
involved in the day-to-pay operations of the business).
Accounting 1 Curriculum                                                  Page 146 of 158



Financial claims: Legal rights to an item.

Financial report: Summarized information about the financial status of a business.

Financial statements: Prepare to summarize the changes resulting from business
transactions that occur during an accounting period.


First-in, first-out method: An inventory costing method that assumes that the first
items purchased (first in) were the first items sold (first out).

Fiscal year: An accounting period of twelve months.

FOB destination: Shipping terms specifying that the supplier pays the shipping cost to
the buyer’s destination.

FOB shipping point: Shipping terms specifying that the buyer pays the shipping charge
from the supplier’s shipping point.

Footing: A column total written in small pencil figures.

Form 940: The employer’s unemployment tax return; it includes both federal and state
unemployment taxes paid during the year.

Form 941: The employer’s quarterly federal tax return; it report the accumulated amount
of FICA and federal income tax withheld from employees’ earning for the quarter, as
well as FICA tax owed by the employer.

Form W-2: A form that provides the employee with a summary of earnings and amount
withheld for federal, state, and local taxes; also called a wage and tax statement.

Form W-3: The Transmittal of wage and Tax statement, filed with the federal
government to summarize the information contained on the employees’ Form W:2.

For-profit business: Business that operates to earn money for its owners.

Free enterprise system: A system in which people are free to produce the goods and
services they choose.


Full disclosed: Accounting guideline requiring that a financial report include enough
information so that it is complete.


                                             G
General journal: An all:purpose journal in which all the transaction of a business may
be recorded.
Accounting 1 Curriculum                                                       Page 147 of 158



General ledger: The group of account used by a business.

Generally accepted accounting principles (GAAP): A set of rules used by accountants
to prepare financial reports.

Going concern: The assumption that a business entity will continue to operate for an
indefinite time.

Gross earnings: The total amount of money an employee earns in a pay period.

Gross profit on sales: The amount of profit made during the fiscal period before
expenses are deducted; it is found by subtracting the cost of merchandise sold form net
sales.


                                              H
Horizontal analysis: The comparison of the same items on financial statements for two
or more accounting periods and the analysis of changes from one period to the next.

Income statement: A report of the net income or net loss for a fiscal; sometimes called a
“profit and loss” statement.

Income Summary account: The account in the general ledger used to summarize the
revenue and expenses for the fiscal period.

Interest: The fee charged for the use of money .

Interest rate: The fee charged for the use of the principal when a loan is made.

Interest-bearing: note payable A note that requires the face value plus interest to be paid
at maturity.

Internal controls: steps a business takes to protect cash (for example, limiting the
number of person handling cash).

Inventory: The items of merchandise a business has in stock.

Investments: Those assets owned by a business but not used in the operation of the
business.

Invoice: A bill; a form that lists the quantity, description, until price, and total cost of the
items sold and shipped to a buyer.

Issue date: The data on which a promissory note is written.
Accounting 1 Curriculum                                                      Page 148 of 158


                                            J
Journal: A chronological record of all of the transactions of a business .

Journalizing: The progress of recording business transactions in a journal.


                                            L
Last-in:, first –out method A inventory costing method that assumes that items
purchased are the first items sold.

Ledger: A book or file containing a separate page for each business account; serves as a
permanent record of financial transactions.

Ledger: account form The accounting stationery used to record financial information
about specific accounts.

Liabilities: Amounts owed to creditors; the claims of creditors to the business.

Lifestyle: The way you use your time, energy, and resources.

Liquidity: Ease with which an asset can be converted to cash.

Liquidity ratio: The measure of a business’s ability to pay its current depts. as they
become due and to provide for unexpected needs of cash.

Long-term liabilities: Debts that are not required to be paid within the next accounting
period.

Loss: The result of a company’s spending more than it receives in revenue.




                                           M
Maker: The person or business promising to repay the principal and interest when a loan
is made.

Management Accounting: Reporting information to management, often referred to as
accounting for internal users of accounting information.

Manual accounting system: A system in which accounting information is recorded and
processed by hand.
Accounting 1 Curriculum                                                  Page 149 of 158



Manufacturing business: A business that transforms raw materials into finished
products through the use of labor and machinery.

Market value: The current price that is being charged for similar items of merchandise
in the market.

Matching principle: Principle sting that expenses are compared to revenues for the same
period.

Materiality: An accounting guideline stating that relatively important data should be
included in financial reports.


Maturity date: The due date of a promissory note; the date on which the principal and
interest must be paid.

Maturity value: The principal plus interest on a note that must be paid on the maturity
date.

Medicare: A federal program that provides certain health insurance benefits to retired
people.

Memorandum: A brief written message that describes a transaction that takes place
within a business.

Merchandise: Goods bought for resale to customers.

Merchandising business: A business that buys goods (for example, books or clothing)
and then sells those goods for a profit.

Mutual agency: The characteristics of partnerships under which any partner can enter
into agreements for the business that are binding on all other partners.



                                           N
Net income: The amount of revenue that remains after expenses for the period are
subtracted.

Net loss: The amount by which total expenses exceed total revenue.

Net pay: The amount left after total deductions are subtracted from gross earnings.

Net purchases: The total cost of all merchandise purchased during a fiscal period, less
Accounting 1 Curriculum                                                     Page 150 of 158

any purchases discounts, returns, or allowances.

Net sales: The amount of sales for the period less any sales discounts, returns, or
allowances.

Networking: Making contacts with people to share information and advice.

No interest-bearing note payable: A note from which the interest is deducted at the
time the note is made; a promissory note that has no stated rate of interest on its face.

Normal Balance: The increase side of an account: assets, debit side, liabilities and
capital, credit side. The word normal used here means usual.

Note payable: A promissory note issued to a creditor.

Note receivable: A promissory note that a business accepts from a customer or other
person who owes the business money.

Not-for-profit organization: An organization that does not operate for the purpose of
making a profit.

NSF check: A check returned to the depositor by the bank because there are not
sufficient funds in the drawer’s checking account to cover the check.


                                            O
On Account: When a business or individual buys am item on credit.

Online: The direct link-up of a terminal or cash register to a centralized computer
system.

Operating expenses: The cash spent or assets consumed to earn revenue for a business;
operating expenses do not include federal income tax expense.

Operating income: The taxable income of a corporation.
Other expense: A non: operating expense; an expense that does not result from the
normal operations of the business.

Other Revenue: Non-operating revenue that a business receives from activities outside its
normal operations.

Outstanding deposits: Deposits that have been made and recorded in the checkbook but
do not appear on the bank statement.

Overtime rate: Employers are required to pay overtime when employees covered by these
laws work more than 40 hours per week.
Accounting 1 Curriculum                                                   Page 151 of 158



Owner’s equity: Owner’s claims to the assets of the business.



                                            P
Packing slip: A form that list the items included in the shipment.

Paid-in Capital in Excess of Par: The account that represents the amount of cash received
by a corporation over the stock’s par value.

Par value: The dollar amount assigned to each share of stock when the corporation’s
charter is approved; used to determine the amount credited to the capital stock account.

Partnership: Business owned by two or more persons’ called partners, who agree to
operate the business as co: owners.

Partnership agreement: A written document that sets out the terms under which the
partnership will operate.

Partnership Liquidation: Ending a partnership involves winding up the affairs of the
partnership business.

Pay period: The amount of time over which an employee is paid.

Payee: The person or business to whom a check is written or a note is payable.

Payroll: A list of the employees and the payments due to each employee for a specific
pay period.

Payroll Clerk: Responsible for preparing the payroll.

Payroll Register: A from that summarizes information about employees’ earnings for
each pay period.

Payroll Tax Expense: Accountant where the employer’s payroll taxes are recorded.

Percentage of the net sales method: A method of estimating uncollectible debts expense
in which a business assumes that a certain percentage of each year’s net sales will be
uncollectible.

Periodic Inventory System: An inventory system in which the number of items on hand
is determined by a physical count.
Accounting 1 Curriculum                                                     Page 152 of 158

Permanent Accounts: Accounts that are continuous from one accounting period to the
next; balances are carried forward to the next period( fro example, assets, liabilities, and
owner’s capital accounts).

Perpetual Inventory System: An inventory system in which a constant, up:to:date
record of the amount of merchandise on hand is maintained.

Personal Interest tests: Tests that uncover personal preferences you can use to research
potential careers and determine which ones match your particular interests.

Personality: a set of unique qualities that makes us different from all other people.

Petty cash disbursement: A payment made from the petty cash fund.

Petty cash fund: Cash kept on hand for making small, incidental cash payments.

Petty cash register: A record of all disbursements made from the petty cash fund.

Petty cash requisition: A from requesting money to replenish the petty cash fund.

Petty cash voucher: A form that provides proof of payment form the petty cash fund.

Petty cashier: The person responsible for maintaining the petty cash fund and for
making petty cash disbursements.

Physical Inventory: An actual count of all the merchandise on hand and available for
sale.

Plant assets: Long-lived assets that are used in the production or sale of other assets or
services over several accounting periods.

Point-of-sale terminal: Electronic cash register.

Post-closing trial balance: Prepared to verify that total debits equal total credits after the
closing entries are posted.

Posting: The process of transferring information from the general journal to individual
general ledger accounts, the fourth step in the accounting cycle.

Preferred stock: Stock whose owners have certain privileges over common
stockholders.

Premium: The amount paid for insurance.

Principal: The amount of money being borrowed on a promissory note.
Accounting 1 Curriculum                                                    Page 153 of 158

Proceeds: the amount of cash actually received by a borrower on a non:interest:bearing
note payable.

Processing stamp: A stamp placed on a creditor’s invoice that outlines the steps to be
followed in processing the invoice for payment.

Profit: The amount of revenue earned above the expenses incurred to operate the
business.

Profitability ratio: Ratios used to evaluate the earnings performance of a business
during the accounting period (for example, return on common stockholder’s equity).

Promissory note: A written promise to pay a certain amount of money at a specific
future time.

Property: Items of value that are owned or controlled by a business; economic resources
of a business.

Property rights: Creditors’ and owners’ financial claims to the assets of a business.

Proving cash: The process of determining whether the amounts of cash recorded in the
accounting records of a business and in its checkbook agree.

Proving the ledger: Adding all debit balances and all credit balances of ledger accounts
and then comparing the two totals to see whether they are equal.

Proxy: A document that transfers a stockholder’s voting rights to someone else.

Public accounting: Accounting services that range form tax preparation to merger and
acquisition consultation; a variety of accounting services offered to business.

Publicly held corporation: A corporation whose stock is widely held, has a large
market, and is usually traded on a stock exchange.

Purchase order                A written offer to a supplier to buy a certain items.

Purchase requisition          A written request that a certain item or items be ordered.

Purchases account      The account used to record the cost of merchandise purchased
                       during a fiscal period.

Purchases allowance           A price reduction given when a business keeps
                              unsatisfactory merchandise it has bought.

Purchases discount Term used by the buyer to refer to cash discount offered for early
                   payment.
Accounting 1 Curriculum                                                   Page 154 of 158

Purchases journal     A special journal used to record all transactions in which items are
                      bought on account.

Purchases return      The return to the supplier for full credit of merchandise bought on
                      account.

                                           Q
Quick ratio           A measure of the relationship between short:term assets and
                      current liabilities.


                                           R
Ratio analysis        Involves the comparison of two amounts on a financial statement
                      and the evaluation of the relationship between these amounts.

Receipt               A form that serves as a record of a cash receipt.

Reconciling the bank statement       The process of determining any differences between
                                     a bank statement balance and a checkbook balance.

Relevance             A characteristic of accounting requiring that information “make
                      difference” in reaching a business decision.

Reliability           A characteristic requiring that accounting information be
                      reasonably free of bias and error.

Report form           A format for preparing the balance sheet in which the
                      classifications of accounts are listed one under another.

Restrictive endorsement      A check endorsement that restricts or limits how a check
                             may be handle.

Retailer              A business the sells to the final user, the consumer.

Retained earnings     Earnings held by a corporation a not paid to stockholders as a
                      return on their investment.
Return on sales       The portion of each sales dollar that represents profit. To calculate
                      this ratio, divide net incomes by sales.

Revenue               Income earned from the sale of good and services.

Revenue recognition Accounting principle that states that the revenue is recognized and
                    recorded on the date it is earned even if cash has not been received.
Accounting 1 Curriculum                                                  Page 155 of 158

Ruling              A single line drawn under a column of figures to signify that the
                    entries above rule are to be added or subtracted; a double rule
                    under an amount signifies total.


                                           S
Salaries Expenses   The expense account used to record employees eanings.

Salary              A fix amount of money paid to an employee during a pay period.

Sale on account     The sale of merchandise that will be paid for on a later date.

Sales               A revenue account to record the amount of merchandise sold.

Sales allowance     A price reduction granted for damaged goods kept by the
                    customer.

Sales discount      A cash discount.

Sales journal       A special journal used to record only the sales of merchandise on
                    account.

Sales return        Any merchandise returned for credit or a cash refund.

Sales slip           A form that list the details of a sale.

Sales tax            A tax levied by a city or state on the retail sale of merchandise.

Schedule of accounts payable        A list of all creditors in the accounts payable ledger,
                                    the balance in each account, and the total amount
                                    all to each creditor.

Selling expenses    Expenses incurred in selling or marketing the merchandise or
                    services sold to by business.

Service business    Provides a needed service for a fee.

Signature card      A card containing the signature(s) of the person(s) authorized to
                    write checks on a checking account.

Skills              Activities that you perform well.

Slide error         Accidental misplacement of decimal point in an amount.

Sole proprietorship A business owned by one person.
Accounting 1 Curriculum                                                   Page 156 of 158

Source document        A paper prepared as evidence that a transaction occurred.

Special journals       Multicolumn journals that have columns reserved for the recording
                       of specific types of transactions.

Specific identification method        An inventory costing method in the exact cost of
                                      each item in inventory is determined and assigned;
                                      used more often by business that have a low volume
                                      of merchandise with high unit prices.

State Unemployment Tax Act (SUTA)            Requires employers to pay unemployment
                                             taxes.

Statement of changes in owner’s equity       A financial statement prepared to
                                             summarized the effects of business
                                             transactions on capital account.

Statement of changes in partner’s equity A financial statement the reports the changes
                                         in each partner’s capital accounts as results
                                         of business transactions.

Statement of retained earnings        A statement the reports the changes that have taken
                                      place in the Retained Earnings account during the
                                      fiscal period; prepared as a supporting document for
                                      the balance sheet.

Stockholder’s equity          The value of the stockholders’ claims to assets of the
                              corporation.

Stop payment order            A demand by the drawer that the bank not honor a certain
                              check.

Straight line depreciation    A method of equally distributing the cost of a plant asset
                              over the asset’s estimated useful life.

Subsidiary ledger      A ledger that summarized in a controlling account in the general
                       ledger.


                                            T
T account              A account shaped like a “T” that is used for analyzing transactions.

Temporary capital accounts            Accounts used to record information during the
                                      fiscal period that will be transferred to permanent
                                      capital account at the end of the period.
Accounting 1 Curriculum                                                    Page 157 of 158

Term                 The length of time the borrower has to repay a promissory note.

Tickler life         A file that contains a folder for each day of the month; invoices are
                     place in the folder according to their due dates.

Time card            A record of time an employee arrives at work, the time the
                     employees leaves, and the total amount of hours work each day.

Transposition error Occurs when two digits of an amount are accidentally reversed.

Trial balance        A proof of the equality of total debits and credits, the fifth step in
                     the accounting cycle.


                                           U
Uncollectible accounts       An account receivable that cannot be collected, sometimes
                             called a bad debt.

Unemployment taxes           Taxes collected to provided funds for workers who are
                             currently out of work; usually pay only by the employer.


                                           V
Values               Concepts or ideas held important or worthwhile.

Vertical analysis    A method of analysis that requires the restating of dollar amount
                     reported on a financial statement as a percentage of a base amount
                     reported on the same statement.

Voiding a check      Canceling a check by writing the word “Void” across the front
                     with ink.


                                          W
Wage                 An amount of money paid to an employee at a specified rate per
                     hour worked.

Weighted average cost method         An inventory costing method in which all purchases
                                     of an item are added to the beginning inventory of
                                     that item; the total cost is the divided by the total
                                     units to obtain the average cost per unit.

Wholesaler           A business that sells to retailers.
Accounting 1 Curriculum                                              Page 158 of 158

Withdrawal         The removal of cash or another asset from the business by the
                   owner for personal use.

Work sheet         A working paper used to collect information from ledger accounts
                   for use in completing end-of-fiscal-period work.

Working capital    The amount by which current assets exceed current liabilities.

								
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